Blackboard Inc. Reports First Quarter Revenue of $101.1 Million
Blackboard Raises Earnings and Revenue Guidance for Full Year 2010 -
WASHINGTON, May 5, 2010 /PRNewswire via COMTEX/ --Blackboard Inc. (Nasdaq: BBBB) today announced financial results for the first quarter ended March 31, 2010 and updated guidance for the second quarter and the full year of 2010.
Total revenue for the quarter ended March 31, 2010 was $101.1 million, an increase of 17 percent over the first quarter of 2009. Product revenues for the quarter were $93.7 million, an increase of 17 percent over the first quarter of 2009, while professional services revenues for the quarter were $7.3 million, an increase of 16 percent over the first quarter of 2009.
GAAP net income was $5.0 million, resulting in net income per basic and diluted share of $0.15 per share for the first quarter of 2010 compared to a net loss of $37,000 or a net loss per basic and diluted share of ($0.00) per share for the first quarter of 2009. Non-GAAP adjusted net income for the first quarter of 2010, which excludes the amortization of acquisition-related intangible assets, stock-based compensation, and non-cash interest expense, all net of taxes, was $14.4 million, resulting in non-GAAP adjusted net income per diluted share of $0.42 compared to non-GAAP adjusted net income of $8.6 million or $0.27 per diluted share for the first quarter of 2009.
"I am pleased with our strong financial results in the first quarter. We experienced solid revenue growth, with particularly good performance in our U.S. higher education business," said Michael Chasen, chief executive officer and president of Blackboard. "We have strengthened our offerings with the introduction of Blackboard Learn Release 9.1 as well as mobile solutions like Blackboard Mobile Central and Blackboard Mobile Learn. We are well positioned to capture the expanding opportunity in global education."
Highlights from the First Quarter of 2010
- Blackboard's new and expanding client relationships in the quarter included:
- U.S. Higher Education Market: Arizona State University, Gonzaga University, Lindenwood University, Loyola Marymount University, Mountain View College, Oakland Community College, Rutgers University, Ryerson University, Texas A&M University, University of Alabama - Birmingham, University of Wisconsin System Administration and others.
- International Markets: Charles Darwin University, Colegio de Posgraduados (COLPOS), Corporativa Colombia, Giordano Bruno, King Saud University, MondoBIOTECH AG, Northern Grid for Learning, St. Hilda's College, The European Commission, University of Amsterdam and others.
- K-12 Market:Brunswick School (CT), ESSDACK (KS), Gilbert Christian Schools (AZ), Montgomery County Public Schools (MD), Passaic County Vocational Technical High School (NJ), Public Schools of Robeson County (NC), Shawano School District (WI), Thomasville County Schools (OH), Weld County School District (CO) and others.
- Blackboard completed its acquisition of privately-held Saf-T-Net, Inc., provider of AlertNow, a leading messaging and mass notification solution. The acquisition was completed March 19, 2010 for $34.9 million in net cash, including transaction costs.
- Blackboard announced plans for Blackboard Mobile Learn(TM), an application that will bring two-way teaching and learning to mobile devices, creating an interactive mobile learning experience for students and teachers on the go.
- Blackboard announced a partnership with Sprint Corporation to offer Blackboard Mobile Learn(TM) to users of Sprint devices at no additional cost to institutions.
- Blackboard announced the launch of Blackboard Pay(TM), an open-loop prepaid card program that lets educational institutions simplify the disbursement of financial aid credit balances -- as well as student payroll -- while cutting costs for institutions and lowering student fees.
Outlook for the Second Quarter and Full Year of 2010
Second Quarter of 2010:
- Revenue of $104.2 million to $108.2 million;
- Stock-based compensation expense of approximately $5.0 million;
- Amortization of acquired intangibles of approximately $8.8 million;
- GAAP net income of $2.6 million to $4.9 million,
- GAAP net income per diluted share of $0.07 to $0.14, which is based on an estimated 35.1 million diluted shares and an estimated effective tax rate of approximately 33.0 percent;
- Non-GAAP adjusted net income of $11.9 to $14.3 million, which excludes the amortization of acquisition-related intangible assets, stock-based compensation expense, and non-cash interest expense, all net of taxes; and
- Non-GAAP adjusted net income per diluted share of $0.34 to $0.41 based on an estimated 35.1 million diluted shares and an estimated effective tax rate of approximately 38.0 percent.
Full Year 2010:
- Revenue of $433.4 to $445.4 million;
- Amortization of acquired intangibles of approximately $34.5 million;
- Stock-based compensation expense of approximately $20.7 million;
- GAAP net income of $22.7 to $29.7 million,
- GAAP net income per diluted share of $0.64 to $0.84, which is based on an estimated 35.2 million diluted shares and an estimated effective tax rate of approximately 33.0 percent;
- Non-GAAP adjusted net income of $59.8 to $66.8 million, which excludes the amortization of acquisition-related intangible assets, stock-based compensation expense, and non-cash interest expense, all net of taxes;
- Non-GAAP adjusted net income per diluted share of $1.70 to $1.90 based on an estimated 35.2 million diluted shares and an estimated effective tax rate of approximately 37.0 percent;
- Free cash flow from operations (cash flow from operations less purchases of property and equipment) of $80.0 to $90.0 million.
Beginning in the first quarter of 2010, Blackboard will be reporting its revenue in the following two categories: recurring revenue and non-recurring revenue. These new categories replace recurring ratable revenue, non-recurring ratable revenue and other revenue which the Company had previously provided. Blackboard is combining non-recurring-ratable revenues and other revenues in the new non-recurring revenue category. For the purpose of future comparisons, Blackboard is providing recurring revenue and non-recurring revenue for 2009 below:
Three Months Ended March
31, 2009
------------------------
Product Professional Total
Revenue Services -----
------- Revenue
-------
(unaudited and denoted in thousands)
Recurring
revenue $70.4 $1.2 $71.6
Non-recurring
revenue 9.7 5.1 14.8
--- --- ----
Total revenue $80.1 $6.3 $86.4
===== ==== =====
Three Months Ended June
30, 2009
-----------------------
Product Professional Total
Revenue Services -----
------- Revenue
-------
(unaudited and denoted in thousands)
Recurring
revenue $73.6 $1.2 $74.8
Non-recurring
revenue 9.8 7.5 17.3
--- --- ----
Total revenue $83.4 $8.7 $92.1
===== ==== =====
Three Months Ended September
30, 2009
----------------------------
Product Professional Total
Revenue Services -----
------- Revenue
-------
(unaudited and denoted in thousands)
Recurring
revenue $77.6 $1.6 $79.2
Non-recurring
revenue 10.3 8.9 19.2
---- --- ----
Total revenue $87.9 $10.5 $98.4
===== ===== =====
Three Months Ended December
31, 2009
---------------------------
Product Professional Total
Revenue Services -----
------- Revenue
-------
(unaudited and denoted in thousands)
Recurring
revenue $79.8 $1.7 $81.5
Non-recurring
revenue 10.9 7.7 18.6
---- --- ----
Total revenue $90.7 $9.4 $100.1
===== ==== ======
Year Ended December 31,
2009
------------------------
Product Professional Total
Revenue Services -----
------- Revenue
-------
(unaudited and denoted in
thousands)
Recurring
revenue $301.4 $5.7 $307.1
Non-recurring
revenue 40.7 29.2 69.9
---- ---- ----
Total revenue $342.1 $34.9 $377.0
====== ===== ======
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 7:30 p.m. Eastern (4:30 p.m. Pacific) on May 5, 2010 until 11:30 p.m. Eastern (8:30 p.m. Pacific) on May 12, 2010. 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 62015517.
BLACKBOARD INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Three Months Ended
March 31
--------
2009 2010
--- ---
Revenues:
Product $80,126 $93,730
Professional services 6,322 7,336
----- -----
Total revenues 86,448 101,066
Operating expenses:
Cost of product revenues, excludes $3,638
and $2,508 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) 21,444 24,534
Cost of professional services revenues
(1) 4,767 4,479
Research and development (1) 10,827 12,205
Sales and marketing (1) 23,941 25,315
General and administrative (1) 13,602 14,705
Amortization of intangibles resulting
from acquisitions 8,585 8,978
----- -----
Total operating expenses 83,166 90,216
------ ------
Income from operations 3,282 10,850
Other (expense) income:
Interest expense (2,891) (2,888)
Interest income 107 21
Other expense (558) (527)
---- ----
Loss (income) before benefit (provision)
for income taxes (60) 7,456
Benefit (provision) for income taxes 23 (2,420)
---
Net (loss) income $(37) $5,036
==== ======
Net (loss) income per common share:
Basic $(0.00) $0.15
====== =====
Diluted $(0.00) $0.15
====== =====
Weighted average number of common shares:
Basic 31,503,578 33,432,192
========== ==========
Diluted 31,503,578 34,397,711
========== ==========
(1) Includes the following amounts
related to stock-based compensation:
Cost of product revenues $270 $337
Cost of professional services revenues 90 148
Research and development 227 268
Sales and marketing 1,582 1,868
General and administrative 1,818 2,335
Reconciliation of GAAP Net (loss) income
before benefit (provision) for income
taxes to Non-GAAP adjusted net income
(2):
GAAP Net loss before benefit for income
taxes $(60) $7,456
Add: Amortization of intangibles
resulting from acquisitions 8,585 8,978
Add: Stock-based compensation 3,987 4,956
Add: Non-cash interest expense 1,555 1,528
Adjusted provision for income taxes (3) (5,462) (8,527)
------ ------
Non-GAAP adjusted net income $8,605 $14,391
====== =======
Non-GAAP adjusted net income per common
share - diluted $0.27 $0.42
===== =====
Weighted average number of diluted common
shares 32,019,009 34,397,711
========== ==========
(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 38.8% and 37.2% for the three months ended
March 31, 2009 and 2010, respectively.
BLACKBOARD INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31,
2009 2010
---- ----
(in thousands,
except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $167,353 $146,276
Accounts receivable, net 69,098 51,394
Inventories 1,557 378
Prepaid expenses and other
current assets 14,803 14,477
Deferred tax asset, current
portion 2,692 -
Deferred cost of revenues 7,664 6,553
----- -----
Total current assets 263,167 219,078
Deferred tax asset, noncurrent
portion 18,188 18,800
Investment in common stock
warrant 3,124 3,124
Restricted cash 3,923 3,896
Property and equipment, net 34,483 33,044
Other assets 1,453 1,180
Goodwill and intangible assets,
net 400,596 433,583
------- -------
Total assets $724,934 $712,705
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,360 $2,192
Accrued expenses 28,264 21,999
Deferred rent, current portion 1,021 475
Deferred tax liability, current
portion - 478
Deferred revenues, current
portion 186,702 151,347
------- -------
Total current liabilities 218,347 176,491
Notes payable, net of debt
discount 156,177 157,706
Deferred rent, noncurrent portion 11,507 11,879
Deferred tax liability,
noncurrent portion 1,474 1,694
Deferred revenues, noncurrent
portion 5,957 5,269
Stockholders' equity:
Common stock, $0.01 par value 331 340
Additional paid-in capital 406,751 429,900
Accumulated deficit (75,610) (70,574)
------- -------
Total stockholders' equity 331,472 359,666
------- -------
Total liabilities and
stockholders' equity $724,934 $712,705
======== ========
BLACKBOARD INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31
--------
2009 2010
--- ---
(in thousands)
Cash flows from operating activities
Net (loss) income $(37) $5,036
Adjustments to reconcile net (loss) income to
net cash provided by (used in) operating
activities:
Deferred income tax benefit (1,856) (398)
Excess tax benefits from stock-based
compensation (182) (2,800)
Amortization of debt discount 1,555 1,528
Depreciation and amortization 4,719 4,629
Amortization of intangibles resulting from
acquisitions 8,585 8,978
Change in allowance for doubtful accounts 289 (316)
Stock-based compensation 3,987 4,956
Changes in operating assets and liabilities:
Accounts receivable 35,786 18,488
Inventories (178) 1,178
Prepaid expenses and other current assets (3,858) 629
Deferred cost of revenues 1,344 1,112
Accounts payable 73 (1,628)
Accrued expenses (6,914) (3,571)
Deferred rent 658 (173)
Deferred revenues (39,585) (38,877)
------- -------
Net cash provided by (used in) operating
activities 4,386 (1,229)
Cash flows from investing activities
Purchases of property and equipment (5,287) (3,165)
Payments for patent enforcement costs (41) -
Purchase of available-for-sale investments (6,586) -
Acquisitions, net of cash acquired - (34,912)
--- -------
Net cash used in investing activities (11,914) (38,077)
Cash flows from financing activities
Release of letter of credit 80 27
Excess tax benefits from stock-based
compensation 182 2,800
Proceeds from exercise of stock options 1,684 15,402
----- ------
Net cash provided by financing activities 1,946 18,229
----- ------
Net decrease in cash and cash equivalents (5,582) (21,077)
Cash and cash equivalents at beginning of year 141,746 167,353
------- -------
Cash and cash equivalents at end of year $136,164 $146,276
======== ========
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.
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 17, 2010 with the SEC. In addition, the forward-looking statements included in this press release represent the Company's views as of May 5, 2010. 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 5, 2010.
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, all net of taxes, 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 in 2010 that are determined on a basis that excludes amortization of acquired intangibles, stock-based compensation expense and non-cash interest expense, all net of taxes.
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 17, 2010, 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.