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Blackboard Inc. Reports Fourth Quarter and Year End 2006 Results

       - Fourth Quarter Revenue Increases 44 Percent to $51.4 million -

                     - Company Raises FY 2007 Guidance -

WASHINGTON, Feb. 6 /PRNewswire-FirstCall/ -- Blackboard Inc. (Nasdaq: BBBB) today announced financial results for the fourth quarter and year ended December 31, 2006 and updated guidance for the first quarter and full year 2007.

Blackboard's fourth quarter revenue was $51.4 million, an increase of 44 percent over the same period in 2005. The increase in revenue was driven by strong growth in Blackboard's annual licensing of enterprise level products to global academic institutions including clients resulting from the acquisition of WebCT, Inc., which closed on February 28, 2006. Product revenue in the fourth quarter was $46.8 million, an increase of 46 percent over the $32.0 million of product revenue last year. Professional services revenue for the quarter was $4.6 million, which represents an increase of 25 percent over the same period in 2005.

Net income in the fourth quarter was $201,000, resulting in net income per basic and diluted share of $0.01. Non-GAAP cash net income, which excludes the amortization of acquired intangibles, stock-based compensation expense and the associated tax impact, was $4.6 million in the fourth quarter resulting in a non-GAAP cash net income per diluted share of $0.16.

"This was a tremendous year for Blackboard and our industry," said Michael Chasen, chief executive officer and president for Blackboard. "In 2006, we were able to significantly expand our client relationships through the acquisition and successful integration of WebCT while continuing to deliver innovative technologies and leading client support and services."

Total revenue for the year ended December 31, 2006 was $183.1 million, an increase of 35 percent over 2005. Net loss was $10.7 million in 2006, resulting in a net loss per basic and diluted share of $0.39. Non-GAAP cash net income in 2006, which excludes the amortization of acquired intangibles, stock-based compensation expense and the associated tax impact, was $6.5 million, resulting in a non-GAAP cash net income per diluted share of $0.22. Additionally, Blackboard prepaid $35.0 million in principal on acquisition debt in 2006.

Highlights from the Fourth Quarter of 2006

* Blackboard's new and expanding client relationships in the quarter included:

    -- U.S. Higher Education: Iowa State University, North Carolina Community
       College System, Pima Community College, Portland Community College,
       Salt Lake Community College, San Diego Community College District,
       Seton Hall University, Texas A&M University - College Station, The
       Board of Trustees of the University of Alabama, The College of New
       Jersey, University of Alabama at Huntsville, University of Florida
       Board of Trustees, University of Houston, University of Massachusetts
       Amherst, University of North Alabama and Weber State University.
    -- International: Flinders University of South Australia, Keele
       University, La Trobe University, Leeds Metropolitan University, London
       Metropolitan University, Middlesex University, Napier University,
       Queensland University of Technology, Sheffield Hallam University,
       Universidad de Sevilla, University of Canterbury, University of East
       London, University of Melbourne, University of Portsmouth, University
       of Sheffield, University of Stellenbosch and University of Tasmania.
    -- K-12: Amarillo Independent School District (TX), Broward County Public
       Schools (FL), Clear Creek Independent School District (TX), Cuyahoga
       Heights Schools (OH), Illinois State University Lab School (IL), Monroe
       County Public Schools (FL), Naperville CUSD 203 (IL), North East
       Florida Educational Consortium (FL), PAIS/BOA (PA), Pasadena
       Independent School District (CA), Pittsylvania County Schools (VA),
       Polk County Public Schools (FL), Rocky Hill School (RI), St. James
       Parish School Board (LA) and The School District of Palm Beach County
       (FL).

    Highlights from the Year End 2006

    * Blackboard completed its acquisition of WebCT, Inc. on February 28,
      2006 marking a major milestone in the education industry.
    * Blackboard ended 2006 with 3,462 clients representing an increase of 53
      percent over 2005.
    * Blackboard's enterprise-class licenses (Blackboard Learning System(TM)
      - Enterprise, Blackboard Community System(TM), Blackboard Transaction
      System(TM) and the Blackboard Content System(TM)), totaled 3,492 at the
      end of 2006, which represents an increase of 67 percent over 2005.
    * Blackboard launched the Blackboard Beyond Initiative(TM), which is
      focused on developing a series of Web properties that connect the
      institutions, faculty, and students who use Blackboard applications
      worldwide across education segments and disciplines.
    * Blackboard's BbOne(SM) offering is now in use at 65 U.S. higher
      education institutions.  As of December 31, 2006, more than 1,000 off-
      campus merchants are now accepting BbOne as a form of payment.

    Notice of Change to Financial Guidance

Beginning in the first quarter of 2007 Blackboard management will begin providing financial guidance and reporting on two new non-GAAP financial measures: "Non-GAAP Adjusted Net Income" and "Non-GAAP Adjusted Net Income per Share," which exclude the amortization of acquired intangibles and the associated tax impact. These new measures will replace "Non-GAAP Cash Net Income" and "Non-GAAP Cash Net Income per Share," which the Company had previously provided.

For the purpose of future comparisons, Blackboard is providing Non-GAAP Adjusted Net Income (Loss) and Non-GAAP Adjusted Net Income (Loss) per Share for 2006. Below is historical reconciliation of income (loss) before benefit (provision) for income taxes to Non-GAAP Adjusted Net Income (Loss) (1):


                                  Q1 2006  Q2 2006  Q3 2006  Q4 2006  FY 2006
                                  -------  -------  -------  -------  -------
                                   (unaudited and denoted in thousands except
                                               per share amounts)
    Income (loss) before benefit
     (provision) for income taxes    $218  $(9,023) $(6,775)    $261 $(15,319)
    Add: Amortization of
     intangibles resulting from
     acquisitions                   1,837    5,377    5,377    5,378   17,969
    Adjusted (provision) benefit
     for income taxes (2)            (812)   1,440      552   (2,227)  (1,047)
                                  -------  -------  -------  -------  -------
    Non-GAAP adjusted net income
     (loss)                        $1,243  $(2,206)   $(846)  $3,412   $1,603
                                  =======  =======  =======  =======  =======
    Non-GAAP adjusted net income
     (loss) per common share -
     diluted                        $0.04   $(0.08)  $(0.03)  $0.12     $0.06
                                  =======  =======  =======  =======  =======

    (1) 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.

    (2) Adjusted (provision) benefit for income taxes is applied at an
    effective rate of 39.5%.


    Financial Guidance for 2007

    First Quarter of 2007:

    * Revenue of $53.0 to $54.2 million;
    * Amortization of acquired intangibles of approximately $5.4 million;
    * Net income of $1.3 to $1.8 million, resulting in net income per diluted
      share of $0.04 to $0.06, which is based on an estimated 29.5 million
      diluted shares and an effective tax rate of 41.5 percent; and
    * Non-GAAP adjusted net income excluding the amortization of acquired
      intangibles and the associated tax impact, of $4.4 to $4.9 million,
      resulting in non-GAAP adjusted net income per diluted share of $0.15 to
      $0.17 based on an estimated 29.5 million diluted shares and an
      effective tax rate of 41.5 percent.

    Full Year 2007:

    * Revenue of $230 to $235 million;
    * Amortization of acquired intangibles of approximately $22 million;
    * Net income of $10 to $12 million, resulting in net income per diluted
      share of $0.33 to $0.40, which is based on an estimated 30 million
      diluted shares and an effective tax rate of 41.5 percent; and
    * Non-GAAP adjusted net income excluding the amortization of acquired
      intangibles and the associated tax impact, of $22.5 to $24.5 million,
      resulting in non-GAAP adjusted net income per diluted share of $0.75 to
      $0.82 based on an estimated 30 million diluted shares and an effective
      tax rate of 41.5 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 6, 2007 until 11:00 p.m. Eastern (8:00 p.m. Pacific) on February 13, 2007. 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 86268897.



                               BLACKBOARD INC.

                    CONSOLIDATED STATEMENTS OF OPERATIONS

              (in thousands, except share and per share amounts)


                                Three Months Ended          Year Ended
                                    December 31,            December 31,
                              ------------------------------------------------
                                  2005        2006        2005        2006
                              ----------- ----------- ----------- -----------
                              (unaudited) (unaudited)              (unaudited)
    Revenues:
      Product                     $32,048     $46,795    $120,389    $160,392
      Professional services         3,698       4,625      15,275      22,671
                              ----------- ----------- ----------- -----------
    Total revenues                 35,746      51,420     135,664     183,063
    Operating expenses:
      Cost of product
       revenues, excludes
       $2,800 and $9,333 in
       amortization of
       acquired technology
       included in
       amortization of
       intangibles resulting
       from acquisitions shown
       below for the three and
       twelve months ended
       December 31, 2006,
       respectively (1)             7,789      10,246      29,607      39,594
      Cost of professional
       services revenues (1)        2,721       3,940      10,220      16,001
      Research and
       development (1)              3,783       7,005      13,945      27,162
      Sales and marketing (1)       9,604      14,420      37,873      58,340
      General and
       administrative (1)           4,842       8,760      19,306      35,823
      Amortization of
       intangibles resulting
       from acquisitions               66       5,378         266      17,969
                              ----------- ----------- ----------- -----------
    Total operating expenses       28,805      49,749     111,217     194,889
                              ----------- ----------- ----------- -----------
    Income (loss) from
     operations                     6,941       1,671      24,447     (11,826)
    Other income (expense):
      Interest expense                (10)     (1,598)        (49)     (5,354)
      Interest income               1,207         406       3,146       2,380
      Other expense                     -        (218)          -        (519)
                              ----------- ----------- ----------- -----------
    Income (loss) before
     benefit (provision) for
     income taxes                   8,138         261      27,544     (15,319)
    Benefit (provision) for
     income taxes                  14,973         (60)     14,309       4,582
                              ----------- ----------- ----------- -----------
    Net income (loss)             $23,111        $201     $41,853    $(10,737)
                              =========== =========== =========== ===========
    Net income (loss) per
     common share:
      Basic                         $0.85       $0.01       $1.57      $(0.39)
                              =========== =========== =========== ===========
      Diluted                       $0.79       $0.01       $1.47      $(0.39)
                              =========== =========== =========== ===========

    Weighted average number of
     common shares:
      Basic                    27,273,665  28,144,314  26,714,748  27,857,576
                              =========== =========== =========== ===========
      Diluted                  29,214,963  29,113,413  28,509,777  27,857,576
                              =========== =========== =========== ===========

    (1) Includes the following
     amounts related to stock-
     based compensation:
      Cost of product revenues         $-        $109          $-        $386
      Cost of professional
       services revenues                -           5           -         524
      Research and development          -         289           -         733
      Sales and marketing               -         712           -       2,951
      General and
       administrative                  20         903          75       3,462


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

    Income (loss) before
     benefit (provision) for
     income taxes                  $8,138        $261     $27,544    $(15,319)
    Add: Amortization of
     intangibles resulting
     from acquisitions                 66       5,378         266      17,969
    Add: Stock-based
     compensation                      20       2,018          75       8,056
    Adjusted provision for
     income taxes (3)              (3,248)     (3,025)    (11,015)     (4,229)
                              ----------- ----------- ----------- -----------
    Non-GAAP cash net income       $4,976      $4,632     $16,870      $6,477
                              =========== =========== =========== ===========
    Non-GAAP cash net income
     per common share -
     diluted                        $0.17       $0.16       $0.59       $0.22
                              =========== =========== =========== ===========
    Adjusted weighted average
     number of common
     shares - diluted          29,214,963  29,113,413  28,509,777  28,988,839
                              =========== =========== =========== ===========

    (2) Non-GAAP cash net income and non-GAAP cash 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
    39.5% for the three months ended December 31, 2005 and 2006, respectively,
    and 39.5% for the year ended December 31, 2005 and 2006, respectively.



                               BLACKBOARD INC.

                    CONDENSED CONSOLIDATED BALANCE SHEETS


                                            December 31,       December 31,
                                                2005              2006
                                           ---------------   ---------------
                                                              (unaudited)
                                                   (in thousands,
                                              except per share amounts)
                                    ASSETS
    Current assets:
       Cash and cash equivalents                   $75,895           $30,776
       Short-term investments                       62,602                 -
       Accounts receivable, net                     26,136            52,394
       Inventories                                   1,806             2,377
       Prepaid expenses and other current
        assets                                       2,116             3,514
       Deferred tax asset, current
        portion                                     10,274             8,883
       Deferred cost of revenues, current
        portion                                      5,797             7,983
                                           ---------------   ---------------
          Total current assets                     184,626           105,927


    Deferred tax asset, noncurrent portion          12,023            23,874
    Deferred cost of revenues, noncurrent
     portion                                         1,310             4,253
    Deferred merger costs (WebCT, Inc.)              4,956                 -
    Restricted cash                                    521             1,999
    Property and equipment, net                      9,940            12,761
    Goodwill                                        10,252           101,644
    Intangible assets, net                             560            56,841
                                           ---------------   ---------------
    Total assets                                  $224,188          $307,299
                                           ===============   ===============


                     LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
       Accounts payable                             $1,833            $2,238
       Accrued expenses                             14,083            20,519
       Term loan, current portion                        -               246
       Deferred rent, current portion                  347               371
       Deferred revenues, current portion           74,975           117,972
                                           ---------------   ---------------
          Total current liabilities                 91,238           141,346

    Term loan, noncurrent portion, net of
     debt discount                                       -            23,377
    Deferred rent, noncurrent portion                  426               157
    Deferred revenues, noncurrent portion            2,199             2,298
    Stockholders' equity:
       Common stock, $0.01 par value                   275               282
       Additional paid-in capital                  210,805           231,331
       Accumulated deficit                         (80,755)          (91,492)
                                           ---------------   ---------------
    Total stockholders' equity                     130,325           140,121
                                           ---------------   ---------------
    Total liabilities and stockholders'
     equity                                       $224,188          $307,299
                                           ===============   ===============



                               BLACKBOARD INC.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                         Year Ended
                                                        December 31,
                                              ------------------------------
                                                   2005             2006
                                              ------------      ------------
                                                                 (unaudited)
                                                       (in thousands)
    Cash flows from operating activities
    Net income (loss)                              $41,853          $(10,737)
    Adjustments to reconcile net income
     (loss) to net cash provided by
     operating activities:
      Deferred income tax benefit                  (14,799)           (6,657)
      Excess tax benefits from stock-based
       compensation                                      -            (3,317)
      Amortization of debt discount                      -             1,701
      Depreciation and amortization                  6,867             8,980
      Amortization of intangibles
       resulting from acquisitions                     266            17,969
      Change in allowance for doubtful
       accounts                                       (253)             (109)
      Noncash stock-based compensation                  75             8,056
      Changes in operating assets and
       liabilities:
        Accounts receivable                         (4,197)          (21,780)
        Inventories                                    188              (571)
        Prepaid expenses and other current
         assets                                       (910)              (42)
        Deferred cost of revenues                   (2,191)           (5,129)
        Accounts payable                               719               133
        Accrued expenses                             2,373            (5,087)
        Deferred rent                                 (294)             (245)
        Deferred revenues                           10,116            38,640
                                              ------------      ------------
    Net cash provided by operating activities       39,813            21,805

    Cash flows from investing activities
      Acquisition of WebCT, Inc., net of
       cash acquired                                     -          (153,547)
      Payments for merger costs (WebCT, Inc.)       (2,536)                -
      Purchase of property and equipment            (7,959)          (10,081)
      Payments for patent enforcement costs              -              (276)
      Purchase of held-to-maturity securities      (33,296)                -
      Sale of held-to-maturity securities            9,750            23,546
      Purchase of available-for-sale
       securities                                  (55,306)                -
      Sale of available-for-sale securities         36,250            39,056
                                              ------------      ------------
    Net cash used in investing activities          (53,097)         (101,302)

    Cash flows from financing activities
      Proceeds from revolving credit facility         (762)           10,000
      Payments on revolving credit facility              -           (10,000)
      Proceeds from term loan                            -            57,522
      Payments on term loan                              -           (35,600)
      Release of letter of credit                        -             1,777
      Payments on letters of credit                                   (1,798)
      Excess tax benefits from stock-based
       compensation                                      -             3,317
      Proceeds from exercise of stock options       11,792             9,160
                                              ------------      ------------
    Net cash provided by financing activities       11,030            34,378
                                              ------------      ------------
    Net decrease in cash and cash equivalents       (2,254)          (45,119)
    Cash and cash equivalents at beginning
     of period                                      78,149            75,895
                                              ------------      ------------
    Cash and cash equivalents at end of
     period                                        $75,895           $30,776
                                              ============      ============



    Use of Non-GAAP Financial Measures

This release includes information about the Company's non-GAAP cash net income, non-GAAP cash net income per share, 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, stock-based compensation expense, 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, stock-based compensation expense, 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 9, 2006, 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.

http://www.blackboard.com

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-Q filed on November 9, 2006 with the SEC. In addition, the forward- looking statements included in this press release represent the Company's views as of February 6, 2007. 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 6, 2007.

SOURCE Blackboard Inc.

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