Blackboard Announces Acquisition of NTI Group
Blackboard Acquires Leading Alert and Notification Provider of Mass Voice,
Text, Email and SMS Messaging for Academic Institutions and Other
Provides Updated Fourth Quarter 2007 and Initial Standalone 2008 Guidance
WASHINGTON, Jan. 14 /PRNewswire-FirstCall/ -- Blackboard Inc.
(Nasdaq: BBBB), a leading provider of enterprise software and services to the
education community today announced a definitive agreement to acquire
privately-held NTI Group, Inc., a leading provider of mass messaging and
notifications solutions for educational and government organizations via
voice, email, SMS, and other text-receiving devices.
Under terms of the agreement, Blackboard will acquire NTI for $182 million
subject to certain adjustments. The purchase price will be paid $132 million
in cash and $50 million in stock. In addition, up to an additional $17
million in consideration may be paid in stock based on attainment of certain
financial targets over the two years following the close of the acquisition.
This acquisition enables Blackboard to better help institutions address
several key challenges and trends which are taking place within the education
1. As online learning continues to grow and more institutions utilize the
internet to connect with traditional and virtual students, it is
becoming increasingly important to have the capability to deliver mass
communications with large populations of users across an array of
2. In addition, it has become imperative that academic institutions have
the ability to quickly and effectively communicate with their entire
campus constituency in the wake of a range of school and campus
tragedies, severe weather and other safety concerns; and
3. Institutions are focusing on mobile-centric strategies and looking to
tightly integrate their learning environments with cell phones and
In addition, this positions Blackboard to assist Governmental agencies and
municipalities which are also increasingly expected to reach their entire
constituencies directly in an expeditious, time sensitive and cost-effective
manner in the event of serious public safety matters.
The acquisition of the NTI Group moves Blackboard into the fast-growing
alert and notification market, forecast by Yankee Group to grow to an
estimated $1.2 billion in revenue in the United States by 2011, representing a
five-year compounded average annual growth rate of over 30 percent. The
combination of Blackboard and NTI adds another mission-critical offering to
Blackboard's existing suite of enterprise products and fulfills a key
education technology priority. The addition of NTI's Connect-ED offering will
allow Blackboard to extend its leadership in North American higher education
and establish a much more significant presence with U.S. K-12 institutions
where NTI has already established a significant client base.
NTI is located in Sherman Oaks, CA and provides comprehensive
communication services designed specifically for academic institutions as well
as local, state and federal government entities. As of the third quarter of
2007, NTI had more than 1,200 contracts for the Connect-ED system in the U.S.
K-12 market covering more than 14,000 schools and districts. NTI had 130
contracts in the U.S. higher education market covering approximately 200
colleges and universities. Additionally, the Connect-CTY, Connect-GOV and
Connect-MIL services provide mass notification functionality to a fast growing
number of municipal, government and military customers. The company's mass
notification systems are designed to allow users to quickly and easily record
and send time-sensitive notifications to thousands of people in minutes using
just a computer or telephone. The NTI service operates as a fully hosted,
fully managed Application Service Provider (ASP) / Software as a Service
(SaaS); users are able to deploy a complete messaging and notification system
without investing in, or maintaining, hardware, software, or additional phone
lines. Messages can be sent to recipients' landlines, cell phones, PDAs/text-
based devices, SMS, e-mail accounts, and TTY/TDD devices for the hearing
"Time-sensitive mass notification systems are a top priority for global
academic institutions," said Michael Chasen, Blackboard's President and Chief
Executive Officer. "NTI is the leading provider of these systems to
educational institutions and government agencies and the addition of their
solutions is an excellent next step in the growth of Blackboard's product
portfolio. NTI expands our client base significantly and in particular adds
more than 1,200 new relationships with key IT decision makers in the K-12
market. I believe the union of our companies will create substantial cross-
selling opportunities and add significant shareholder value."
"We are extremely pleased to become a part of Blackboard and enhance their
product offering with our mission critical communications technology," said
Robin Richards, NTI Chairman and Chief Executive Officer. "We believe that we
can leverage Blackboard's existing infrastructure, geographic diversity and
relationships in higher education to efficiently expand the reach of our
Both companies' Boards of Directors have approved the transaction.
Subject to regulatory approval and other customary closing conditions, the
transaction is expected to close in the first quarter of 2008. The combined
companies will operate under the Blackboard name and brand with corporate
headquarters located in Washington, DC.
The combination of Blackboard and NTI unites two innovators serving
academic institutions, as well as government and corporate clients. Key
strengths expected from the combination include:
-- Combined client base of more than 4,900 K-12 schools, colleges and
universities as well as a growing presence in government organizations
-- Unmatched depth and breadth of product offering;
-- Enhanced cross-selling opportunities to both the existing NTI and
Blackboard client bases;
-- Strengthened management with extensive experience in global education
-- Increased revenue growth, profitability and cash flow over time.
Financial Details of the NTI Acquisition
NTI's business model offers many of the same financial characteristics as
Blackboard's, including an annual recurring subscription-based licensing
model, ratable revenue recognition, a stable institutional client base and
historically high renewal rates. As a result, the combination is expected to
enhance growth and profitability over time. Blackboard expects the
transaction to be slightly accretive to earnings on a non-GAAP adjusted basis
excluding the impact of purchase accounting adjustments on deferred revenues
and non-recurring merger-related costs and dilutive on a GAAP basis for fiscal
Blackboard retained Wachovia Securities as its financial advisor and Dewey
& LeBoeuf as its legal advisor. NTI retained UBS Investment Bank as its
financial advisor and Latham and Watkins LLP as its legal advisor.
"NTI is a fast growing company in a high growth market segment and has
been extremely successful in scaling their business," commented Chasen.
"NTI's 2007 revenue is expected to be approximately $30 million which would
represent an annual growth rate in excess of 50 percent over the prior year.
We believe we can extend NTI's leadership position and scale the business in
the coming years."
Preliminary Fourth Quarter 2007 Update and Guidance
Concurrent with its acquisition announcement of NTI, Blackboard is also
providing some highlights and financial guidance for the fourth quarter ended
December 31, 2007 and initial standalone guidance for 2008.
Highlights from Blackboard's fourth quarter include:
-- 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 3,935.
-- Blackboard announced a partnership with the Sony Corporation to support
Sony FeliCa contactless technology in the Blackboard Commerce Suite.
The partnership goal is to develop new technology that improves student
service in a cost effective manner.
-- During the fourth quarter of 2007, Blackboard acquired a small
technology company to augment the content management capabilities of
the Blackboard Academic Suite. As the result of this transaction and
other merger-related activity Blackboard incurred $1 million of
non-recurring expense and $300,000 of increased amortization expense in
the fourth quarter.
Based on preliminary results, Blackboard is providing the following
updated guidance for the fourth quarter of 2007:
-- Revenue of $62.0 to $63.0 million for the fourth quarter of 2007;
-- Amortization of acquired intangibles of approximately $5.8 million;
-- Net income of $3.4 to $3.9 million, resulting in net income per diluted
share of $0.11 to $0.13, which is based on an estimated 30.4 million
diluted shares and an effective tax rate of 41.5 percent. The
company's net income will include approximately $1.3 million or $0.04
per share of additional expense in the quarter which is attributable to
$1.0 million of non-recurring merger-related expense and $300,000 of
additional amortization expense;
-- Non-GAAP adjusted net income, excluding the amortization of acquired
intangibles and the associated tax impact, of $6.9 to $7.4 million,
resulting in non-GAAP adjusted net income per diluted share of $0.23 to
$0.25, which is based on an estimated 30.4 million diluted shares and
an effective tax rate of 40.5 percent. The company's non-GAAP net
income will include approximately $1.0 million or $0.03 per share of
non-recurring merger-related expense;
-- Cash flow from operations in excess of $25 million.
The guidance for the fourth quarter of 2007 is based on preliminary,
unaudited financial results, and the final results reported by Blackboard for
the period may be materially different.
Initial 2008 Blackboard Standalone Guidance
Blackboard management is also providing preliminary 2008 revenue guidance
of approximately $278 to $284 million, exclusive of the acquisition of the NTI
Group. The company will provide additional commentary and information on the
NTI acquisition conference call scheduled for January 14, 2008.
NTI Acquisition Conference Call Information
Blackboard will hold an investor and analyst conference call at 8:00 a.m.
ET / 5:00 a.m. PT on Monday, January 14, 2008. A slide presentation regarding
the proposed acquisition may be accessed at Blackboard's investor relations
Web site at http://investor.blackboard.com.
When: Monday, January 14, 2008
Time: 8:00 a.m. ET / 5:00 a.m. PT
Live Webcast: http://investor.blackboard.com
Dial in: (800) 561-2718
A replay of the call will be available via telephone from approximately
11:00 a.m. Eastern (8:00 a.m. Pacific) on February 5, 2008 until 12:00 a.m.
Eastern (9:00 p.m. Pacific) on February 12, 2008. 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 35946018.
About Blackboard Inc.
Blackboard is a leading provider of enterprise software and services to
the education industry. The Company's product line consists of five software
applications bundled in two suites, the Blackboard Academic Suite(TM) and the
Blackboard Commerce Suite(TM). Blackboard's clients include colleges,
universities, 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
and staff in North America, Europe, Australia and Asia.
About The NTI Group
The NTI Group, Inc. (NTI), a Delaware corporation, is a privately held
company that provides communication systems designed specifically for local,
regional, state, and Federal government entities. The Connect(TM) family of
services enables rapid dissemination of critical information via voice and
text devices using its premier mass notification engine designed to allow
users to quickly and easily record and send time-sensitive notifications to
thousands of people in minutes using just a telephone. NTI makes and
distributes the Connect-ED(R), Connect-CTY(R), Connect-GOV(R), and Connect-
MIL(R) systems, allowing users to target specific groups and/or geographic
regions within their database(s) and engage recipients in two-way
communication by asking them to respond to questions via their telephone
Forward Looking Statements
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, including
statements about future financial performance and the expected benefits of the
acquisition and its impact on Blackboard's financial results in future
periods, 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 timing and extent of regulatory
review, the timing of the closing, the ability of Blackboard to integrate the
business, operations and personnel of NTI following the acquisition, and the
ability of both companies to retain their existing customers and gain new
customers before and after the closing of the acquisition. Other factors that
could affect the results discussed in our forward-looking statements include
those set forth in the "Risk Factors" section of our most recent 10-Q filed
with the SEC. In addition, the forward-looking statements included in this
press release represent the Company's views as of January 14, 2008. 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 January 14, 2008.
Use of Non-GAAP Financial Measures
This release includes information about the Company's non-GAAP adjusted
net income and non-GAAP adjusted net 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 that can be effectively managed. Because 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 November 8, 2007, as well as other filings
with the Securities and Exchange Commission when assessing the Company's
financial condition and results of operations.
SOURCE Blackboard Inc.
CONTACT: Corporate, Investor and Financial Media, Michael J. Stanton,
Vice President, Investor Relations of Blackboard Inc.,
+1-202-463-4860, ext. 2305, or Education & Trade Media, Amy Storey of
+1-202-828-8819, for Blackboard Inc.