Blackboard Inc. Reports Fourth Quarter and Year End 2007 Results
- Fourth Quarter Revenue Increases 23 Percent to $63.2 million -
WASHINGTON, Feb. 5 /PRNewswire-FirstCall/ -- Blackboard Inc.
(Nasdaq: BBBB) today announced financial results for the fourth quarter and
year ended December 31, 2007 and updated guidance for the first quarter and
full year 2008.
Blackboard's fourth quarter revenue was $63.2 million, an increase of 23
percent over the same period in 2006. The increase in revenue was driven by
growth in Blackboard's annual licensing of enterprise level products to global
academic institutions as well as continued strong growth in our global ASP
hosting business. Product revenue in the fourth quarter was $57.4 million, an
increase of 23 percent over the $46.8 million of product revenue last year.
Professional services revenue for the quarter was $5.8 million, which
represents an increase of 26 percent over the same period in 2006.
Net income was $4.2 million for the fourth quarter of 2007 compared to net
income of $201,000 in the same period last year. Net income per basic and
diluted share was $0.14 compared to a net income per basic and diluted share
of $0.01 in the same period last year. Non-GAAP adjusted net income for the
fourth quarter of 2007, which excludes the amortization of acquisition-related
intangible assets, net of taxes, was $7.7 million, resulting in non-GAAP
adjusted net income per diluted share of $0.25 compared to non-GAAP adjusted
net income of $3.4 million and non-GAAP adjusted net income per diluted share
of $0.12 for the fourth quarter of 2006.
Total revenue for the year ended December 31, 2007 was $239.4 million, an
increase of 31 percent over 2006. Net income was $12.9 million for the full
year 2007 compared to a net loss of $10.7 million in the same period last
year. For the full year 2007, net income per basic share was $0.45 and net
income per diluted share was $0.43 compared to a net loss per basic and
diluted share of ($0.39) for the full year 2006. Non-GAAP adjusted net income
for the full year 2007, which excludes the amortization of acquisition-related
intangible assets, net of taxes, was $26.2 million, resulting in non-GAAP
adjusted net income per diluted share of $0.87 compared to non-GAAP adjusted
net income of $1.6 million and non-GAAP adjusted net income per diluted share
of $0.06 for the full year 2006.
"This was a tremendous year for Blackboard," said Michael Chasen, chief
executive officer and president for Blackboard. "We are pleased with our
financial results, made possible by our global client base adopting Blackboard
products and services to manage their most mission-critical technologies.
During the year, we realized strong revenue and earnings performance and
generated operating cash-flows of more than $69 million."
Highlights from the Fourth Quarter of 2007
-- Blackboard's new and expanding client relationships in the quarter
included:
-- U.S. Higher Education: CSU-Colorado, Dominican College, Framingham
State College, Grinnell College, Harford Community College, Holy
Family University, Indiana Wesleyan University, Kendall College,
Kentucky Community and Technical College System, Kishwaukee College,
Labette Community College, Northeastern University, Ohio University,
Rio Hondo College, Rivier College, SUNY - Jefferson Community
College, Tallahassee Community College, Texas State Technical
College System, University of Arkansas at Monticello, University of
Dallas, Vassar College, Washington State University-Vancouver,
Waynesburg College and others.
-- International: Amersham & Wycombe College, Caribbean University,
Central University of Technology, Charles Darwin University,
Croatian Academic and Research Network CARNET, Deakin University,
Ferris University, Lewisham College, Newcastle College, Niels Brock
College Copenhagen, Spiru Haret University, Universidade Anhembi
Morumbi, University of Kent at Canterbury and others.
-- K-12: Alaska Student Instructional Services (AK), Albuquerque Public
Schools (NM), Archdiocese of New Orleans Office of Catholic Schools
(LA), Briarcliff Manor Union Free School District (NY), Connecticut
Distance Learning Consortium (CT), Galena Park Independent School
District (TX), Henry County Public Schools (GA), Jefferson County
Public Schools (CO), Lafayette Parish School Board (LA), Lake
Stevens School District (WA), Mississippi Department of Education -
Center for Professional Development (MS), South East Cornerstone
School Division #209 (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 3,935.
Blackboard also ended 2007 with 3,536 total clients.
Financial Guidance for 2008
Blackboard's financial guidance for the first quarter and full year 2008
reflects the inclusion of the NTI Group, Inc. starting January 31, 2008, the
effective date of the acquisition. Blackboard's 2008 revenue related to NTI
deferred revenue will be approximately $12 million lower than what NTI would
have recognized as an independent company. When former NTI clients pay
annually on their license agreements, Blackboard will recognize revenue for
the fair value of these agreements over the term of the renewal, which is
generally one year. Blackboard's 2008 results will also be negatively impacted
by approximately $5 million in merger and integration related expenses from
the NTI acquisition.
Guidance for the First Quarter of 2008:
-- Revenue of $64.0 to $66.0 million;
-- Stock-based compensation expense of approximately $3.9 million;
-- Amortization of acquired intangibles of approximately $8.7 million;
-- GAAP net loss of ($5.7) to ($4.9) million, resulting in a GAAP net loss
per diluted share of ($0.18) to ($0.16), which is based on an estimated
31.5 million diluted shares and an estimated effective tax rate of 39.5
percent; and
-- Non-GAAP adjusted net income (loss) excluding the amortization of
acquired intangibles and the associated tax impact, of a net loss of
($500,000) to net income of $300,000, resulting in a non-GAAP adjusted
net loss per diluted share of ($0.02) to non-GAAP adjusted net income
per share of $0.01 based on an estimated 31.5 million diluted shares
and an estimated effective tax rate of 39.5 percent.
Guidance for the Full Year 2008:
-- Revenue of $306 to $314 million;
-- Stock-based compensation expense of approximately $17 million;
-- Amortization of acquired intangibles of approximately $37.6 million;
-- Net interest expense of approximately $2.6 million;
-- GAAP net loss of ($4.0) million to ($800,000), resulting in a GAAP net
loss per diluted share of ($0.12) to ($0.02), which is based on an
estimated 32.4 million diluted shares and an estimated effective tax
rate of 39.5 percent; and
-- Non-GAAP adjusted net income excluding the amortization of acquired
intangibles and the associated tax impact, of $18.8 to $22.0 million,
resulting in non-GAAP adjusted net income per diluted share of $0.58 to
$0.68 based on an estimated 32.4 million diluted shares and an
estimated effective tax rate of 39.5 percent.
Conference Call
Blackboard will broadcast its fourth 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 February 5, 2008 until 11:00 p.m.
Eastern (8:00 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 49202597.
BLACKBOARD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Three Months Ended Year Ended
December 31 December 31
-----------------------------------------------
2006 2007 2006 2007
----------- --------- -------- -----------
(unaudited) (unaudited) (unaudited)
Revenues:
Product $46,795 $57,358 $160,392 $213,631
Professional services 4,625 5,844 22,671 25,817
--------- --------- --------- ---------
Total revenues 51,420 63,202 183,063 239,448
Operating expenses:
Cost of product
revenues, excludes
$2,800 and $2,977 for
the three months ended
December 31, 2006 and
2007, respectively, and
$9,333 and $11,654 for
the year ended December
31, 2006 and 2007,
respectively, in
amortization of
acquired technology
included in
amortization of
intangibles resulting
from acquisitions shown
below (1) 10,246 11,833 39,594 47,444
Cost of professional
services revenues (1) 3,940 4,602 16,001 16,941
Research and development (1) 7,005 7,436 27,162 28,278
Sales and marketing (1) 14,420 16,615 58,340 66,033
General and
administrative (1) 8,760 10,425 35,823 38,667
Amortization of
intangibles resulting
from acquisitions 5,378 5,734 17,969 22,122
--------- --------- --------- ---------
Total operating expenses 49,749 56,645 194,889 219,485
--------- --------- --------- ---------
Income (loss) from
operations 1,671 6,557 (11,826) 19,963
Other income (expense):
Interest expense (1,598) (1,931) (5,354) (5,766)
Interest income 406 2,341 2,380 5,673
Other income (expense) (218) (1,395) (519) 575
--------- --------- --------- ---------
Income (loss) before
(provision) benefit for
income taxes 261 5,572 (15,319) 20,445
(Provision) benefit for
income taxes (60) (1,369) 4,582 (7,580)
--------- --------- --------- ---------
Net income (loss) $201 $4,203 $(10,737) $12,865
========= ========= ========= =========
Net income (loss) per
common share:
Basic $0.01 $0.14 $(0.39) $0.45
========= ========= ========= =========
Diluted $0.01 $0.14 $(0.39) $0.43
========= ========= ========= =========
Weighted average number
of common shares:
Basic 28,144,314 29,154,396 27,857,576 28,789,083
========== ========== ========== ==========
Diluted 29,113,413 30,256,902 27,857,576 30,113,621
========== ========== ========== ==========
(1) Includes the
following amounts
related to stock-based
compensation:
Cost of product revenues $109 $203 $386 $672
Cost of professional
services revenues 5 160 524 631
Research and development 289 116 733 467
Sales and marketing 712 1,181 2,951 4,359
General and administrative 903 1,622 3,462 5,914
Reconciliation of income
(loss) before (provision)
benefit for income taxes
to non-GAAP adjusted net
income (2):
Income (loss) before
benefit (provision) for
income taxes $261 $5,572 $(15,319) $20,445
Add: Amortization of
intangibles resulting
from acquisitions 5,378 5,734 17,969 22,122
Adjusted provision for
income taxes (3) (2,227) (3,634) (1,047) (16,318)
--------- --------- --------- ----------
Non-GAAP adjusted net
income $3,412 $7,672 $1,603 $26,249
========= ========= ========= =========
Non-GAAP adjusted net
income per common share
- diluted $0.12 $0.25 $0.06 $0.87
========= ========= ========= =========
(2) Non-GAAP adjusted net income (loss) and non-GAAP adjusted net income
(loss) 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 provision for income taxes is applied at an effective rate
of approximately 39.5% and 32.1% for the three months ended December
31, 2006 and 2007, respectively, and approximately 39.5% and 38.3% for
the year ended December 31, 2006 and 2007, respectively.
BLACKBOARD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2006 2007
------------- -------------
(unaudited)
(in thousands,
except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $30,776 $206,558
Accounts receivable, net 52,394 52,846
Inventories 2,377 2,089
Prepaid expenses and other current
assets 3,514 5,255
Deferred tax asset, current
portion 7,326 6,549
Deferred cost of revenues, current
portion 7,983 6,793
------------- -------------
Total current assets 104,370 280,090
Deferred tax asset, noncurrent
portion 25,431 34,154
Deferred cost of revenues, noncurrent
portion 4,253 84
Restricted cash 1,999 4,015
Property and equipment, net 12,761 18,584
Goodwill and intangible assets, net 158,485 168,349
------------- -------------
Total assets $307,299 $505,276
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,238 $3,747
Accrued expenses 20,519 24,182
Term loan, current portion 246 -
Deferred rent, current portion 371 160
Deferred revenues, current portion 117,972 126,600
------------- -------------
Total current liabilities 141,346 154,689
Term loan, noncurrent portion, net of
debt discount 23,377 -
Notes payable, net of debt discount - 161,519
Deferred rent, noncurrent portion 157 1,469
Deferred revenues, noncurrent portion 2,298 2,925
Stockholders' equity:
Common stock, $0.01 par value 282 292
Additional paid-in capital 231,331 263,582
Accumulated deficit (91,492) (79,200)
------------- -------------
Total stockholders' equity 140,121 184,674
------------- -------------
Total liabilities and stockholders'
equity $307,299 $505,276
============= =============
BLACKBOARD INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
December 31
---------------------------
2006 2007
--------- ---------
(unaudited)
(in thousands)
Cash flows from operating activities
Net (loss) income $(10,737) $12,865
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Deferred income tax benefit (5,075) (2,830)
Excess tax benefits from stock-based
compensation (3,317) (6,845)
Amortization of debt discount 1,701 1,840
Depreciation and amortization 8,980 10,681
Amortization of intangibles
resulting from acquisitions 17,969 22,122
Change in allowance for doubtful
accounts (109) (2)
Noncash stock-based compensation 8,056 12,043
Changes in operating assets and
liabilities:
Accounts receivable (21,780) (225)
Inventories (571) 288
Prepaid expenses and other current
assets (42) (1,233)
Deferred cost of revenues (5,129) 372
Accounts payable 133 952
Accrued expenses (5,588) 9,394
Deferred rent (245) 1,101
Deferred revenues 38,640 8,834
--------- ---------
Net cash provided by operating
activities 22,886 69,357
Cash flows from investing activities
Purchases of property and equipment (10,081) (16,023)
Payments for patent enforcement
costs (276) (4,186)
Acquisitions, net of cash acquired (154,628) (27,664)
Sales and purchases of securities,
net 62,602 -
--------- ---------
Net cash used in investing activities (102,383) (47,873)
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 (35,600) (24,400)
Release of letters of credit 1,777 -
Payments on letters of credit (1,798) (1,976)
Excess tax benefits from stock-based
compensation 3,317 6,845
Proceeds from exercise of stock
options 9,160 13,373
--------- ---------
Net cash provided by financing
activities 34,378 154,298
--------- ---------
Net (decrease) increase in cash and
cash equivalents (45,119) 175,782
Cash and cash equivalents at
beginning of year 75,895 30,776
--------- ---------
Cash and cash equivalents at end of
year $30,776 $206,558
========= =========
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.
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 February 5, 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 February 5, 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: Michael J. Stanton, Vice President, Investor Relations of
Blackboard Inc., +1-202-463-4860, ext. 2305