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Blackboard Inc. Reports First Quarter Revenue of $86.4 Million

- Company Announces Acquisition of ANGEL Learning, Inc. -

WASHINGTON, May 6 /PRNewswire-FirstCall/ -- Blackboard Inc. (Nasdaq: BBBB) today announced financial results for the first quarter ended March 31, 2009 and updated guidance for the second quarter and the full year of 2009.

Total revenue for the quarter ended March 31, 2009 was $86.4 million, an increase of 26 percent over the first quarter of 2008. Product revenues for the quarter were $80.1 million, an increase of 27 percent over the first quarter of 2008, while professional services revenues for the quarter were $6.3 million, an increase of 18 percent over the first quarter of 2008.

GAAP net loss was $37,000, resulting in a net loss per basic and diluted share of ($0.00) for the first quarter of 2009 compared to a net loss of $4.4 million or a net loss per basic and diluted share of ($0.15) per share for the first quarter of 2008. Non-GAAP adjusted net income for the first quarter of 2009, which excludes the amortization of acquisition-related intangible assets, stock-based compensation, and non-cash interest expense, all net of taxes, was $8.6 million, resulting in non-GAAP adjusted net income per diluted share of $0.27 compared to non-GAAP adjusted net income of $4.1 million or $0.13 per diluted share for the first quarter of 2008. Our 2008 results have been adjusted to reflect the adoption of FSP APB 14-1 related to our outstanding convertible debt.

"I am pleased with our strong financial results in the first quarter which highlight the strength of our business model, our high annual renewal rate and our ability to effectively manage our expenses," said Michael Chasen, chief executive officer and president for Blackboard. "While demand for our products and services in some areas has been impacted by the challenging economic environment the past few quarters, we continue to see solid growth in many of our core markets and are managing our business well to capture the significant market opportunity we see in front of us."

    Highlights from the First Quarter of 2009

    --  Blackboard's new and expanding client relationships in the quarter
        included:
        --  U.S. Higher Education Market: Brunswick Community College, Chapman
            University College, Claremont University, Cuyahoga Community
            College, DeSales University, Mid-Plains College, Montgomery
            College, Owens Community College, Santa Clara University, Sierra
            College, University of Pittsburgh, University of Southern
            Mississippi, Webster University and others.
        --  International Markets: Amersham and Wycombe College, Bournemouth
            University, Instituto Nacional de Salud Publica, Interamerican
            University of Puerto Rico, Middlesborough College, National
            College of Puerto Rico, Queen Mary University of London, Rikkyo
            University, Servicio Nacional de Aprendizaje (SENA), Universidad
            Autonoma de Baja California, Universidad Catolica de Santiago de
            Guayaquil, Universidade Catolic Portugesa, University of
            Manchester, Utrecht University, York University and others.
        --  K-12 Market: Christa McAuliffe Academy, Clear Creek Independent
            School District, Cleveland County Schools, Florida State
            University Schools, Midlothian Independent School District,
            Pennsylvania Cyber Charter School, Phillips Academy Andover,
            Rochester Public Schools, Sacramento City Unified School District,
            Shelby County School District, Sweetwater Union High School
            District, Walnut Valley Unified School District and others.
    --  Blackboard's enterprise licenses (Blackboard Learning System(TM) -
        Enterprise, Blackboard Community System(TM), Blackboard Transaction
        System(TM),  Blackboard Content System(TM), Blackboard Connect (TM)
        and Blackboard Outcomes System(TM)), totaled 6,836 as of March 31,
        2009.

    --  The Company announced the availability of Release 9.0 of the
        Blackboard Learn(TM) platform (formerly the Blackboard Academic
        Suite(TM)).  The release introduces a range of powerful capabilities,
        from social learning tools to Web 2.0 innovations, as well as
        integrated components that enable institutions to achieve more
        meaningful assessments of individuals, groups, programs and schools.

    Blackboard to Acquire ANGEL Learning, Inc.

In a separate announcement today, Blackboard announced its planned acquisition of ANGEL Learning, a leading provider of e-learning applications to educational institutions.

Under terms of the agreement, Blackboard will acquire ANGEL Learning for approximately $95 million, net of cash acquired and excluding transaction costs. The approximate purchase price will be $80 million in cash and $15 million in common stock. The transaction is expected to close in May 2009. Blackboard expects this transaction to be accretive on a pro forma non-GAAP basis for calendar year 2009, excluding the write-off of deferred revenues in purchase accounting and non-recurring merger and integration costs.

Outlook for the Second Quarter and Full Year of 2009

Blackboard's financial guidance for the second quarter and full year 2009 reflects the inclusion of ANGEL Learning, based on an anticipated acquisition close in May 2009. Blackboard expects ANGEL Learning to contribute approximately $0.5 million and $7 million in GAAP revenue for the second quarter of 2009 and full year 2009, respectively.

As an adjustment to deferred revenue in purchase accounting, Blackboard expects that there will be a deferred revenue write-down of approximately $6.0 million over the next 12 months. The deferred revenue write-down is expected to be approximately $2.0 million in the second quarter of 2009 and approximately $5.0 million for the full year 2009. Blackboard currently expects the transaction to be dilutive for full year 2009 on a GAAP basis by approximately $0.28 per diluted share and on an adjusted non-GAAP basis by approximately $0.14 per diluted share.

    Second Quarter of 2009:

    --  Revenue of $87.5 to $90.5 million;
    --  Stock-based compensation expense of approximately $4.3 million;
    --  Amortization of acquired intangibles of approximately $8.0 million;
    --  GAAP net loss of ($1.9) million to breakeven,
    --  GAAP net loss per basic share of ($0.06) to GAAP net income per
        diluted share of $0.00, which is based on an estimated 32.0 million
        basic shares and 32.5 million diluted shares, respectively, and an
        estimated effective tax rate of approximately 38.5 percent;
    --  Non-GAAP adjusted net income of $6.5 to $8.4 million, which excludes
        the amortization of acquisition-related intangible assets, stock-based
        compensation, and non-cash interest expense, all net of taxes; and

    --  Non-GAAP adjusted net income per diluted share of $0.20 to $0.26 based
        on an estimated 32.5 million diluted shares and an estimated effective
        tax rate of approximately 38.5 percent.

    Full Year 2009:

    --  Revenue of $365.5 to $374.5 million;
    --  Stock-based compensation expense of approximately $16.6 million;
    --  Amortization of acquired intangibles of approximately $35.5 million;
    --  GAAP net income of $3.9 to $9.4 million,
    --  GAAP net income per diluted share of $0.12 to $0.29, which is based on
        an estimated 32.7 million diluted shares; and an estimated effective
        tax rate of approximately 38.5 percent;
    --  Non-GAAP adjusted net income of $39.6 to $45.1 million, which excludes
        the amortization of acquisition-related stock-based compensation, and
        non-cash interest expense stock-based compensation, and certain
        defined non-cash items, all net of taxes;
    --  Non-GAAP adjusted net income per diluted share of $1.21 to $1.38
        based on an estimated 32.7 million diluted shares and an estimated
        effective tax rate of approximately 38.5 percent;
    --  Cash flow from operations of $85.0 to $95.0 million; and

    --  Capital expenditures of approximately 5 to 6 percent of total revenue.

    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 7:00 p.m. Eastern (4:00 p.m. Pacific) on May 6, 2009 until 11:00 p.m. Eastern (8:00 p.m. Pacific) on May 13, 2009. 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 58094377.



                          BLACKBOARD INC.

          UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

         (in thousands, except share and per share amounts)

                                             Three Months Ended
                                                  March 31
                                                  --------
                                              2008        2009
                                              ----        ----
    Revenues:
      Product                              $63,109     $80,126
      Professional services                  5,366       6,322
                                             -----       -----
    Total revenues                          68,475      86,448
    Operating expenses:
      Cost of product revenues, excludes
       $4,078 and $3,638 for the three
       months ended March 31, 2008 and
       2009, respectively, in amortization
       of acquired technology included in
       amortization of intangibles
       resulting from acquisitions
       shown below (1)                      15,970      21,444
      Cost of professional services
       revenues (1)                          4,948       4,767
      Research and development (1)           9,733      10,827
      Sales and marketing (1)               20,859      23,941
      General and administrative (1)        12,753      13,602
      Amortization of intangibles
       resulting from acquisitions           8,679       8,585
                                             -----       -----
    Total operating expenses                72,942      83,166
                                            ------      ------
    (Loss) income from operations           (4,467)      3,282
    Other (expense) income:
      Interest expense (2)                  (2,981)     (2,891)
      Interest income                          890         107
      Other (expense) income                   310        (558)
                                               ---        ----
    Loss before benefit
     for income taxes (2)                   (6,248)        (60)
    Benefit for income taxes                 1,804          23
                                             -----          --
    Net loss (2)                           $(4,444)       $(37)
                                           =======        ====
    Net loss per common share: (2)
      Basic                                 $(0.15)     $(0.00)
                                            ======      ======
      Diluted                               $(0.15)     $(0.00)
                                            ======      ======
    Weighted average number
     of common shares:
      Basic                             30,247,568  31,503,578
                                        ==========  ==========
      Diluted                           30,247,568  31,503,578
                                        ==========  ==========

    (1) Includes the following amounts
     related to stock-based compensation:
      Cost of product revenues                $176        $270
      Cost of professional services
       revenues                                163          90
      Research and development                 162         227
      Sales and marketing                    1,416       1,582
      General and administrative             1,763       1,818


    (2) Blackboard adopted FASB Staff Position No. APB 14-1,
     "Accounting for Convertible Debt Instruments That May Be
     Settled in Cash upon Conversion (Including Partial Cash
     Settlement)" ("FSP APB 14-1") effective January 1, 2009,
     which required restatement of prior periods, as
     applicable.  The three months ended March 31, 2008 have
     been adjusted to reflect additional amortization of debt
     discount of $1,151.  Interest expense, Loss before benefit
     for income taxes, Net loss, and Net loss per common share -
     Basic and Diluted have been adjusted accordingly and were
     previously reported as $(1,830), $(5,097), $(3,293), and
     $(0.11), respectively, for the three months ended March
     31, 2008.



    Reconciliation of GAAP Net loss before benefit for income taxes
    to Non-GAAP adjusted net income (3):

    GAAP Net loss before benefit
     for income taxes                      $(6,248)       $(60)
    Add:  Amortization of intangibles
     resulting from acquisitions             8,679       8,585
    Add: Stock-based compensation            3,680       3,987
    Add: Non-cash interest expense           1,595       1,555
    Adjusted provision for
     income taxes (4)                       (3,520)     (5,462)
                                            ------      ------
    Non-GAAP adjusted net
     income (5)                             $4,186      $8,605
                                            ======      ======
    Non-GAAP adjusted net income per
     common share - diluted (5)              $0.13       $0.27
                                             =====       =====
    Weighted average number
     of diluted common shares           31,045,797  32,019,009
                                        ==========  ==========

    (3) 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.

    (4) Adjusted provision for income taxes is applied at an effective rate of
     approximately 45.7% and 38.8% for the three months ended March 31, 2008
     and 2009, respectively.

    (5) Beginning in fiscal 2009, the Company changed the definition it
     utilizes for non-GAAP adjusted net income.  For the 2008 period presented
     in the reconciliation of GAAP Net loss before benefit for income taxes to
     non-GAAP adjusted net income, the new definition for non-GAAP adjusted
     net income is being used which excludes the amortization of intangibles
     resulting from acquisitions, stock-based compensation, and non-cash
     interest expense, all net of taxes.



                                  BLACKBOARD INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS


                                            December 31,      March 31,
                                               2008             2009
                                               ----             ----
                                                             (unaudited)
                                                  (in thousands,
                                             except per share amounts)
                                  ASSETS
    Current assets:
      Cash and cash
       equivalents                            $141,746       $136,164
      Short-term investments                         -          6,586
      Accounts receivable, net                  92,529         56,455
      Inventories                                1,783          1,961
      Prepaid expenses and
       other current assets (6)                  8,361         11,382
      Deferred tax asset,
       current portion                           1,796          2,055
      Deferred cost of revenues                  7,126          5,927
                                                 -----          -----
        Total current assets                   253,341        220,530

    Deferred tax asset,
     noncurrent portion (6)                     18,897         20,494
    Investment in common
     stock warrant                               1,990          1,990
    Restricted cash                              4,249          4,169
    Property and equipment, net                 31,950         32,678
    Other assets                                   549          1,241
    Goodwill and intangible
     assets, net                               338,976        328,689
                                               -------        -------
    Total assets                              $649,952       $609,791
                                              ========       ========


                   LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                          $2,579         $2,652
      Accrued expenses                          27,879         19,201
      Deferred rent,
       current portion                             345             88
      Deferred revenues,
       current portion                         179,238        139,868
                                               -------        -------
        Total current
         liabilities                           210,041        161,809

    Notes payable, net of
     debt discount (6)                         149,923        151,478
    Deferred rent,
     noncurrent portion                         10,959         11,874
    Deferred revenues,
     noncurrent portion                          5,554          5,340
    Stockholders' equity:
      Common stock, $0.01
       par value                                   314            316
      Additional paid-in
       capital (6)                             356,683        362,533
      Accumulated deficit (6)                  (83,522)       (83,559)
                                               -------        -------
    Total stockholders' equity                 273,475        279,290
                                               -------        -------
    Total liabilities and
     stockholders' equity                     $649,952       $609,791
                                              ========       ========

    (6)  As noted in footnote (2) above, FSP APB 14-1 required
     restatement of prior periods.  Prepaid expenses and other current
     assets, Deferred tax assets, Notes payable, Additional paid-in
     capital, and Accumulated deficit have been adjusted accordingly
     and were previously reported as $8,518, $27,146, $163,172,
     $344,698, and $(76,380), respectively, as of December 31, 2008.



                                  BLACKBOARD INC.

                  UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                            Three Months Ended
                                                                 March 31
                                                                 --------
                                                               2008      2009
                                                               ----      ----
                                                               (in thousands)
    Cash flows from operating activities
    Net loss (7)                                            $(4,444)     $(37)
    Adjustments to reconcile net loss to
     net cash (used in) provided by
     operating activities:
      Deferred income tax benefit                            (1,671)   (1,856)
      Excess tax benefits from stock-based compensation        (563)     (182)
      Amortization of debt discount (7)                       1,595     1,555
      Depreciation and amortization                           3,316     4,719
      Amortization of intangibles resulting from
       acquisitions                                           8,679     8,585
      Change in allowance for doubtful accounts                  30       289
      Stock-based compensation                                3,680     3,987
      Changes in operating assets and liabilities:
        Accounts receivable                                   7,842    35,786
        Inventories                                             234      (178)
        Prepaid expenses and other current assets (7)        (1,018)   (3,858)
        Deferred cost of revenues                               957     1,344
        Accounts payable                                        457        73
        Accrued expenses                                     (4,469)   (6,914)
        Deferred rent                                         1,469       658
        Deferred revenues                                   (22,149)  (39,585)
                                                            -------   -------
    Net cash (used in) provided by operating
     activities                                              (6,055)    4,386

    Cash flows from investing activities
      Purchases of property and equipment                    (7,944)   (5,287)
      Payments for patent enforcement costs                    (635)      (41)
      Purchase of available-for-sale investments                  -    (6,586)
      Acquisitions, net of cash acquired                   (131,923)        -
                                                           --------    ------
    Net cash used in investing activities                  (140,502)  (11,914)

    Cash flows from financing activities
      Release of letter of credit                                 -        80
      Excess tax benefits from stock-based compensation         563       182
      Proceeds from exercise of stock options                 1,802     1,684
                                                              -----     -----
    Net cash provided by financing activities                 2,365     1,946
                                                              -----     -----
    Net decrease in cash and cash equivalents              (144,192)   (5,582)
    Cash and cash equivalents at beginning of year          206,558   141,746
                                                            -------   -------
    Cash and cash equivalents at end of year                $62,366  $136,164
                                                            =======  ========

    (7)  As noted in footnote (2) above, FSP APB 14-1 required restatement of
     prior periods.  Net loss, Amortization of debt discount, and Prepaid
     expenses and other current assets have been adjusted accordingly and were
     previously reported as $(3,293), $459, and $(1,033), respectively, for
     the three months ended March 31, 2008.

About Blackboard Inc.

Blackboard Inc. (Nasdaq: BBBB) is a global leader in enterprise technology and innovative solutions that improve the experience of millions of students and learners around the world every day. Blackboard's solutions allow thousands of higher education, K-12, professional, corporate, and government organizations to extend teaching and learning online, facilitate campus commerce and security, and communicate more effectively with their communities. Founded in 1997, Blackboard is headquartered in Washington, D.C., with offices in North America, Europe, Asia and Australia.

    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. These forward looking statements include statements about our expected financial results for the first quarter of 2009 and the full year 2009 and other statements about our future financial performance. 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 26, 2009 with the SEC. In addition, the forward-looking statements included in this press release represent the Company's views as of May 6, 2009. 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 6, 2009.

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 the amortization of acquisition-related intangible assets, stock-based compensation, and non-cash interest expense, 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 enhanced comparability 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, and in 2009 also excludes stock-based compensation expense and non-cash interest expense.

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 26, 2009, 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.

    -0-                           05/06/2009
    /CONTACT:  For Financial Media and Investors, Michael J. Stanton, Senior
Vice President, Investor Relations, +1-202-463-4860 ext. 2305, or For
Education & General Media, Matthew Maurer, Director, Public Relations,
+1-202-463-4860 ext. 2637, matthew.maurer@blackboard.com, both of Blackboard
Inc./
    /Web Site:  http://www.blackboard.com /
    (BBBB)

CO:  Blackboard Inc.; ANGEL Learning, Inc.

ST:  District of Columbia
IN:  EDU CPR HED
SU:  ERN ERP CCA TNM

PR
-- PH12456 --
6256 05/06/2009 16:00 EDT http://www.prnewswire.com