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Blackboard Inc. First Quarter Revenue Increases 24 Percent to $68.5 Million

First Quarter 2008 Revenue and Earnings Exceed Guidance NTI and WebCT Cross-Selling Begins

WASHINGTON, May 7 /PRNewswire-FirstCall/ -- Blackboard Inc. (Nasdaq: BBBB) today announced financial results for the first quarter ended March 31, 2008 and updated guidance for the second quarter and the full year of 2008.

Total revenue for the quarter ended March 31, 2008 was $68.5 million, an increase of 24 percent over the first quarter of 2007. Product revenues for the quarter were $63.1 million, an increase of 26 percent over the first quarter of 2007, while professional services revenues for the quarter were $5.4 million, an increase of 1% over the first quarter of 2007.

Net loss was $3.3 million, resulting in a net loss per basic and diluted share of ($0.11) for the first quarter of 2008 compared to net income of $1.9 million and net income per basic and diluted share of $0.07 for the first quarter of 2007. Non-GAAP adjusted net income for the first quarter of 2008, which excludes the amortization of acquisition-related intangible assets, net of taxes, was $2.0 million, resulting in non-GAAP adjusted net income per diluted share of $0.06 compared to non-GAAP adjusted net income of $5.2 million and non-GAAP adjusted net income per diluted share of $0.18 for the first quarter of 2007.

"We had strong financial results to begin 2008 with our revenue and earnings significantly beating our original guidance," said Michael Chasen, chief executive officer and president for Blackboard. "Our revenue over- performance was driven by continued strong growth in our licensing and managed hosting sales and due to better than expected results from our acquisition of The NTI Group."

Highlights from the First Quarter of 2008

"Our sales team maintained their focus during the first quarter of the NTI acquisition integration and sales training," added Chasen. "We had a meaningful increase in the average deal size closed in the quarter and I was proud of the cross-selling activity that took place with former WebCT clients as well as our ability to sell our new Blackboard Connect(TM) offering into the U.S. higher education market."

    -- A few of Blackboard's new and expanded client relationships in the
       quarter included:

           -- U.S. Higher Education: Charleston Southern University, Clemson
              University, Delgado Community College, Edison College, Georgia
              Institute of Technology, Hillsborough Community College,
              Louisiana Tech University, Metropolitan Community College,
              Monroe County Community College, New York University, Owens
              Community College, Princeton Theological Seminary, Purdue
              University, Saint Peters College, University of Miami,
              University System of Georgia, Virginia Community College System,
              Wake Tech Community College and others.

           -- International: Aston University, Caribbean University, Dublin
              City University, Japan Women's University, Kanagawa Prefectual
              Board of Education, Kanto Gakuin University, Kuanas University
              of Technology, Osaka University, Ritsumeikan University,
              Takushoku University, Universidad Espiritu Santo, Universidad
              Ibero Americana, University of Sydney, University of Sharja,
              University of Staffordshire, University of Wollongong and
              others.

           -- K-12: Atlanta Public Schools (GA), Commonwealth Governor's
              School (VA), Connecticut Distance Learning (CT), Fairfax County
              Public Schools (VA), Lubbock Independent School District (TX),
              Pasadena Independent School District (CA), Richard Milburn High
              School (VA), Rochester Public Schools (NY) and others.

    -- Capella University, George Mason University, McMaster University, and
       Villanova University were among the first former-WebCT clients to
       purchase the Blackboard Community System(TM) and/or the Blackboard
       Content System(TM).

    -- Blackboard completed the acquisition of The 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 and brought to market the new Blackboard Connect
       offering.

    -- In the quarter, there were nearly 150 new Blackboard Connect deals
       closed and more than twenty Blackboard Connect deals were closed with
       existing Blackboard U.S. higher education clients.

    -- Blackboard Learning System(TM) 8 for former WebCT clients was released
       addressing the remaining outstanding product issues and bringing to
       market the most stable and scalable eLearning platform to date.

    -- Blackboard announced the opening of a new datacenter in Mascot, New
       South Wales, Australia.

    -- Blackboard launched Blackboard Educator Central(TM), a comprehensive
       and fully-hosted professional development solution designed to help
       districts to affordably manage, deliver and evaluate professional
       development and build powerful educator communities of practice.


    Outlook for the Second Quarter and Full Year of 2008

"Our team is focused on solid execution across our entire business including the continued successful integration of NTI," commented Michael Chasen. "We expect that the global education industry will remain strong and that Blackboard is well positioned for another great year."

Blackboard is providing the following financial guidance for the second quarter and full year 2008. Investors should note that the Company is also adjusting net interest expense to reflect the impact of lower interest rates on our cash and investments. The Company expects that net interest expense will be approximately $2.7 million higher than our original 2008 guidance.

    Second Quarter of 2008:

    -- Revenue of $74.8 to $76.8 million;

    -- Amortization of acquired intangibles of approximately $9.9 million;

    -- Net loss of ($2.9) to ($2.1) million, resulting in net loss per basic
       share of ($0.09) to ($0.06), which is based on an estimated 31.1
       million basic shares and an estimated effective tax rate of 35 percent;
       and

    -- Non-GAAP adjusted net income, excluding the amortization of acquired
       intangibles and the associated tax impact, of $3.2 to $4.0 million,
       resulting in non-GAAP adjusted net income per diluted share of $0.10 to
       $0.13 based on an estimated 31.9 million diluted shares and an
       estimated effective tax rate of 39 percent.


    Full Year 2008:

    -- Revenue of $310.5 to $316.5 million;

    -- Amortization of acquired intangibles of approximately $38.3 million,
       which is $700,000 higher than our initial 2008 guidance as a result of
       our final valuation of NTI's intangibles;

    -- Net interest expense of approximately $5.3 million;

    -- Net loss of $(3.9) to $(1.5) million, resulting in net loss per basic
       share of ($0.13) to ($0.05), which is based on an estimated 31.5
       million basic shares and an estimated effective tax rate of 35 percent;
       and

    -- Non-GAAP adjusted net income excluding the amortization of acquired
       intangibles and the associated tax impact, of $19.5 to $21.9 million,
       resulting in non-GAAP adjusted net income per diluted share of $0.61 to
       $0.69 based on an estimated 31.9 million diluted shares and an
       estimated effective tax rate of 39 percent.


    Conference Call

Blackboard will broadcast its first 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 6:00 p.m. Eastern (3:00 p.m. Pacific) on May 7, 2008 until 11:00 p.m. Eastern (8:00 p.m. Pacific) on May 14, 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 79560013.



                               BLACKBOARD INC.

                    CONSOLIDATED STATEMENTS OF OPERATIONS

              (in thousands, except share and per share amounts)


                                                     Three Months Ended
                                                          March 31,
                                                -----------------------------
                                                   2007              2008
                                                (unaudited)       (unaudited)
                                                -----------       -----------
    Revenues:
      Product                                      $49,981           $63,109
      Professional services                          5,299             5,366
                                                -----------       -----------
    Total revenues                                  55,280            68,475
    Operating expenses:
      Cost of product revenues, excludes
       $2,825 and $4,078 in amortization
       of acquired technology included in
       amortization of intangibles
       resulting from acquisitions shown
       below, respectively (1)                      11,697            15,970
      Cost of professional services
       revenues (1)                                  3,764             4,948
      Research and development (1)                   6,953             9,733
      Sales and marketing (1)                       14,546            20,859
      General and administrative (1)                 9,317            12,753
      Amortization of intangibles
       resulting from acquisitions                   5,399             8,679
                                                -----------       -----------
    Total operating expenses                        51,676            72,942
                                                -----------       -----------
    Income (loss) from operations                    3,604            (4,467)
    Other (expense) income:
      Interest expense                                (758)           (1,830)
      Interest income                                  405               890
      Other income                                      73               310
                                                -----------       -----------
    Income (loss) before (provision)
     benefit for income taxes                        3,324            (5,097)
    (Provision) benefit for income taxes            (1,380)            1,804
                                                -----------       -----------
    Net income (loss)                               $1,944           $(3,293)
                                                ===========       ===========
    Net income (loss) per common share:
      Basic                                          $0.07            $(0.11)
                                                ===========       ===========
      Diluted                                        $0.07            $(0.11)
                                                ===========       ===========
    Weighted average number of common
     shares:
      Basic                                     28,351,872        30,247,568
                                                ===========       ===========
      Diluted                                   29,428,043        30,247,568
                                                ===========       ===========

    (1) Includes the following amounts
     related to stock-based compensation:
      Cost of product revenues                        $129              $176
      Cost of professional services
       revenues                                        116               163
      Research and development                         117               162
      Sales and marketing                              491             1,416
      General and administrative                     1,359             1,763

    Reconciliation of income (loss)
     before (provision) benefit for
     income taxes to non-GAAP adjusted
     net income (2):

    Income (loss) before (provision)
     benefit for income taxes                       $3,324           $(5,097)
    Add: Amortization of intangibles
     resulting from acquisitions                     5,399             8,679
    Adjusted provision for income taxes (3)         (3,512)           (1,624)
                                                -----------       -----------
    Non-GAAP adjusted net income                    $5,211            $1,958
                                                ===========       ===========
    Non-GAAP adjusted net income per
     common share - diluted                          $0.18             $0.06
                                                ===========       ===========

    (2) Non-GAAP adjusted net income and non-GAAP adjusted net 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 provision for income taxes is applied at an effective rate of
        approximately 40.3% and 45.3% for the three months ended March 31,
        2007 and 2008, respectively.



                               BLACKBOARD INC.

                    CONDENSED CONSOLIDATED BALANCE SHEETS


                                               December 31,        March 31,
                                                   2007              2008
                                                                  (unaudited)
                                               ------------      ------------
                                                        (in thousands,
                                                   except per share amounts)
                                    ASSETS
    Current assets:
       Cash and cash equivalents                  $206,558           $62,366
       Accounts receivable, net                     52,846            53,097
       Inventories                                   2,089             1,855
       Prepaid expenses and other current
        assets                                       5,255             7,362
       Deferred tax asset, current
        portion                                      6,549             6,965
       Deferred cost of revenues, current
        portion                                      6,793             5,682
                                               ------------      ------------
          Total current assets                     280,090           137,327

    Deferred tax asset, noncurrent portion          34,154            14,667
    Deferred cost of revenues, noncurrent
     portion                                            84               238
    Restricted cash                                  4,015             4,015
    Property and equipment, net                     18,584            28,315
    Goodwill and intangible assets, net            168,349           369,299
                                               ------------      ------------
    Total assets                                  $505,276          $553,861
                                               ============      ============


                     LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
       Accounts payable                             $3,747            $7,554
       Accrued expenses                             24,182            23,634
       Deferred rent, current portion                  160               415
       Deferred revenues, current portion          126,600           114,946
                                               ------------      ------------
          Total current liabilities                154,689           146,549

    Notes payable, net of debt discount            161,519           161,978
    Deferred rent, noncurrent portion                1,469             2,683
    Deferred revenues, noncurrent portion            2,925             2,474
    Stockholders' equity:
       Common stock, $0.01 par value                   292               309
       Additional paid-in capital                  263,582           322,361
       Accumulated deficit                         (79,200)          (82,493)
                                               ------------      ------------
    Total stockholders' equity                     184,674           240,177
                                               ------------      ------------
    Total liabilities and stockholders'
     equity                                       $505,276          $553,861
                                               ============      ============



                               BLACKBOARD INC.

               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                      Three Months Ended
                                                           March 31,
                                                 -----------------------------
                                                    2007              2008
                                                 (unaudited)       (unaudited)
                                                 -----------       -----------
                                                        (in thousands)
    Cash flows from operating activities
    Net income (loss)                               $1,944           $(3,293)
    Adjustments to reconcile net income to
     net cash provided by (used in)
     operating activities:
      Deferred income tax provision
       (benefit)                                       883            (1,671)
      Excess tax benefits from stock-based
       compensation                                 (1,568)             (563)
      Amortization of debt discount                    211               459
      Depreciation and amortization                  2,512             3,316
      Amortization of intangibles
       resulting from acquisitions                   5,399             8,679
      Change in allowance for doubtful
       accounts                                         43                30
      Noncash stock-based compensation               2,212             3,680
      Changes in operating assets and
       liabilities, net of effect of
       acquisitions:
        Accounts receivable                         11,709             7,842
        Inventories                                    317               234
        Prepaid expenses and other current
         assets                                        (85)           (1,033)
        Deferred cost of revenues                    1,234               957
        Accounts payable                             1,830               457
        Accrued expenses                            (4,856)           (4,469)
        Deferred rent                                 (106)            1,469
        Deferred revenues                          (20,788)          (22,149)
                                                 -----------       -----------
    Net cash provided by (used in)
     operating activities                              891            (6,055)

    Cash flows from investing activities
      Acquisitions, net of cash acquired                 -          (131,923)
      Purchase of property and equipment            (2,417)           (7,944)
      Payments for patent enforcement
       costs                                        (1,233)             (635)
      Purchase of intangible assets                 (1,500)                -
                                                 -----------       -----------
    Net cash used in investing activities           (5,150)         (140,502)

    Cash flows from financing activities
      Payments on term loan                         (5,000)                -
      Payments on letters of credit                   (338)                -
      Excess tax benefits from stock-based
       compensation                                  1,568               563
      Proceeds from exercise of stock
       options                                       3,134             1,802
                                                 -----------       -----------
    Net cash (used in) provided by
     financing activities                             (636)            2,365
                                                 -----------       -----------
    Net decrease in cash and cash
     equivalents                                    (4,895)         (144,192)
    Cash and cash equivalents at beginning
     of period                                      30,776           206,558
                                                 -----------       -----------
    Cash and cash equivalents at end of
     period                                        $25,881           $62,366
                                                 ===========       ===========



    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 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-K dated February 20, 2008, 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.

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-K filed on February 20, 2008 with the SEC. In addition, the forward- looking statements included in this press release represent the Company's views as of May 7, 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 May 7, 2008.

SOURCE Blackboard Inc.

CONTACT: Michael J. Stanton, Vice President, Investor Relations of Blackboard Inc., +1-202-463-4860, ext. 2305