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Blackboard Inc. Reports First Quarter 2007 Results

       - First Quarter Revenue Increases 47 Percent to $55.3 Million -

                - Company Raises Financial Guidance for 2007 -

WASHINGTON, May 2 /PRNewswire-FirstCall/ -- Blackboard Inc. (Nasdaq: BBBB) today announced financial results for the first quarter ended March 31, 2007 and updated guidance for the second quarter and the full year of 2007.

Total revenue for the quarter ended March 31, 2007 was $55.3 million, an increase of 47 percent over the first quarter of 2006. Product revenues for the quarter were $50.0 million, an increase of 51 percent over the first quarter of 2006, while professional services revenues for the quarter were $5.3 million, an increase of 17 percent over the first quarter of 2006. The increase in revenue was driven by strong growth in Blackboard's annual licensing of enterprise level products and ASP hosting service to global academic institutions including clients resulting from the acquisition of WebCT, Inc.

Net income was $1.9 million, resulting in net income per basic and diluted share of $0.07 for the first quarter of 2007 compared to net income of $148,000 and net income per basic and diluted share of $0.01 for the first quarter of 2006. Non-GAAP adjusted net income for the first quarter of 2007, which excludes the amortization of acquisition-related intangible assets, net of taxes, was $5.2 million, resulting in non-GAAP adjusted net income per share of $0.18 compared to non-GAAP adjusted net income of $1.2 million and Non-GAAP adjusted net income per share of $0.04 for the first quarter of 2006.

"As our first quarter financial performance reflects, we are off to a great start in 2007," said Michael Chasen, chief executive officer and president for Blackboard. "In the quarter, I was very pleased with the success we had in expanding our business relationships with U.S. and international higher education institutions."

    Highlights from the First Quarter of 2007
    -- A few of Blackboard's new and expanded client relationships in the
       quarter included:
        -- U.S. Higher Education: Alamo Community Colleges, Campbell
           University, Lincoln Memorial University, Madonna University,
           Mississippi State University, Northeast Mississippi Community
           College, Shaw University, University of Central Oklahoma,
           University of Hartford, University of West Alabama and others.
        -- International: Bath Spa University, Fukushima University, Leiden
           University, Niigata University, Okinawa National College of
           Technology, Oxford Brookes University, Takushoku University,
           Universidad Javeriana, University of New England - Australia,
           University of Southern Denmark and others.
        -- K-12: Anne Arundel County Public Schools (MD), Branksome Hall
           (Toronto, Canada), Clark County Public Schools (NV), Fairfield
           College Prep (CT), Phillips Academy Andover (MA), Riverside Unified
           School District (CA) and others.

    -- Blackboard's enterprise licenses (Blackboard Learning System(TM) -
       Enterprise, Blackboard Community System(TM), Blackboard Transaction
       System(TM), Blackboard Content System(TM) and Blackboard Outcomes
       System(TM)), totaled 3,560 at the end of the quarter, representing an
       increase of 14 percent over the first quarter of 2006.
    -- Blackboard released the Blackboard Outcomes System which helps academic
       institutions make evidence-based decisions, streamline assessment
       processes and engage students.
    -- Blackboard launched Scholar(R), a free, innovative social bookmarking
       Web service, aimed at connecting faculty and students and enhancing
       teaching and learning. This new tool enables millions of Blackboard
       users to connect on a regular basis across institutions and share
       resources.

    Outlook for the Second Quarter and Full Year of 2007

    Second Quarter of 2007:
    -- Revenue of $58.0 to $59.0 million;
    -- Amortization of acquired intangibles of approximately $5.5 million;
    -- Net income of $2.5 to $3.0 million, resulting in net income per diluted
       share of $0.08 to $0.10, which is based on an estimated 29.7 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 $5.8 to $6.3 million,
       resulting in non-GAAP adjusted net income per diluted share of $0.19 to
       $0.21 based on an estimated 29.7 million diluted shares and an
       effective tax rate of 40.5 percent.

    Full Year 2007:
    -- Revenue of $233.0 to $236.0 million;
    -- Amortization of acquired intangibles of approximately $22.0 million;
    -- Net income of $10.6 to $12.1 million, resulting in net income per
       diluted share of $0.35 to $0.41, which is based on an estimated 29.9
       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 $23.9 to $25.4 million,
       resulting in non-GAAP adjusted net income per diluted share of $0.80 to
       $0.85 based on an estimated 29.9 million diluted shares and an
       effective tax rate of 40.5 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 7:00 p.m. Eastern (4:00 p.m. Pacific) on May 2, 2007 until 11:00 p.m. Eastern (8:00 p.m. Pacific) on May 9, 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 80031470.



                                 BLACKBOARD INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

               (in thousands, except share and per share amounts)

                                                    Three Months Ended
                                                         March 31,
                                               -----------------------------
                                                   2006              2007
                                               -----------       -----------
                                               (unaudited)       (unaudited)
    Revenues:
      Product                                      $33,174           $49,981
      Professional services                          4,534             5,299
                                               -----------       -----------
    Total revenues                                  37,708            55,280
    Operating expenses:
      Cost of product revenues, excludes
       $933 and $2,825 in amortization of
       acquired technology included in
       amortization of intangibles
       resulting from acquisitions shown
       below for the three months ended
       March 31, 2006 and 2007,
       respectively (1)                              7,966            11,697
      Cost of professional services
       revenues (1)                                  3,391             3,764
      Research and development (1)                   4,884             6,953
      Sales and marketing (1)                       12,149            14,546
      General and administrative (1)                 7,600             9,317
      Amortization of intangibles
       resulting from acquisitions                   1,837             5,399
                                               -----------       -----------
    Total operating expenses                        37,827            51,676
                                               -----------       -----------
    (Loss) income from operations                     (119)            3,604
    Other income (expense):
      Interest expense                                (578)             (758)
      Interest income                                1,241               405
      Other (expense) income                          (326)               73
                                               -----------       -----------
    Income before provision for income taxes           218             3,324
    Provision for income taxes                         (70)           (1,380)
                                               -----------       -----------
    Net income                                        $148            $1,944
                                               ===========       ===========
    Net income per common share:
      Basic                                          $0.01             $0.07
                                               ===========       ===========
      Diluted                                        $0.01             $0.07
                                               ===========       ===========
    Weighted average number of common shares:
      Basic                                     27,577,200        28,351,872
                                               ===========       ===========
      Diluted                                   28,757,423        29,428,043
                                               ===========       ===========

    (1) Includes the following amounts
     related to stock-based compensation:
      Cost of product revenues                         $35              $129
      Cost of professional services
       revenues                                        118               116
      Research and development                         122               117
      Sales and marketing                              407               491
      General and administrative                       817             1,359

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

    Income before provision for income
     taxes                                            $218            $3,324
    Add: Amortization of intangibles
     resulting from acquisitions                     1,837             5,399
    Adjusted provision for income taxes (3)           (812)           (3,512)
                                               -----------       -----------
    Non-GAAP adjusted net income                    $1,243            $5,211
                                               ===========       ===========
    Non-GAAP adjusted net income per
     common share - diluted                          $0.04             $0.18
                                               ===========       ===========

    (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 39.5% and 40.3% for the three months ended March 31, 2006 and 2007,
    respectively.



                                    BLACKBOARD INC.

                         CONDENSED CONSOLIDATED BALANCE SHEETS


                                              December 31,        March 31,
                                                  2006              2007
                                              ------------      ------------
                                                                 (unaudited)
                                                      (in thousands,
                                                 except per share amounts)
                                  ASSETS
    Current assets:
       Cash and cash equivalents                   $30,776           $25,881
       Accounts receivable, net                     52,394            40,642
       Inventories                                   2,377             2,060
       Prepaid expenses and other current
        assets                                       3,514             3,599
       Deferred tax asset, current portion           7,326             8,480
       Deferred cost of revenues, current
        portion                                      7,983             7,018
                                              ------------      ------------
          Total current assets                     104,370            87,680

    Deferred tax asset, noncurrent portion          25,431            20,027
    Deferred cost of revenues, noncurrent
     portion                                         4,253             3,984
    Restricted cash                                  1,999             2,337
    Property and equipment, net                     12,761            12,691
    Goodwill                                       101,644           105,730
    Intangible assets, net                          56,841            54,029
                                              ------------      ------------
    Total assets                                  $307,299          $286,478
                                              ============      ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
       Accounts payable                             $2,238            $4,068
       Accrued expenses                             20,519            15,266
       Term loan, current portion                      246               196
       Deferred rent, current portion                  371               295
       Deferred revenues, current portion          117,972            96,070
                                              ------------      ------------
          Total current liabilities                141,346           115,895

    Term loan, noncurrent portion, net of
     debt discount                                  23,377            18,638
    Deferred rent, noncurrent portion                  157               127
    Deferred revenues, noncurrent portion            2,298             3,412
    Stockholders' equity:
       Common stock, $0.01 par value                   282               285
       Additional paid-in capital                  231,331           238,242
       Accumulated deficit                         (91,492)          (90,121)
                                              ------------      ------------
    Total stockholders' equity                     140,121           148,406
                                              ------------      ------------
    Total liabilities and stockholders'
     equity                                       $307,299          $286,478
                                              ============      ============



                                 BLACKBOARD INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                     Three Months Ended
                                                          March 31,
                                                -----------------------------
                                                    2006             2007
                                                ------------      -----------
                                                (unaudited)       (unaudited)
                                                       (in thousands)
    Cash flows from operating activities
    Net income                                         $148           $1,944
    Adjustments to reconcile net income to
     net cash (used in) provided by
     operating activities:
      Deferred income tax benefit                      (203)           4,819
      Excess tax benefits from stock-based
       compensation                                     -             (1,568)
      Amortization of debt discount                      34              211
      Depreciation and amortization                   1,902            2,512
      Amortization of intangibles
       resulting from acquisitions                    1,837            5,399
      Change in allowance for doubtful
       accounts                                          (9)              43
      Noncash stock-based compensation                1,499            2,212
      Changes in operating assets and
       liabilities:
        Accounts receivable                           4,231           11,709
        Inventories                                    (541)             317
        Prepaid expenses and other current
         assets                                         426              (85)
        Deferred cost of revenues                       734            1,234
        Accounts payable                                335            1,830
        Accrued expenses                             (9,061)          (8,792)
        Deferred rent                                   124             (106)
        Deferred revenues                           (11,479)         (20,788)
                                                ------------      -----------
    Net cash (used in) provided by
     operating activities                           (10,023)             891

    Cash flows from investing activities
      Acquisition of WebCT, Inc., net of
       cash acquired                               (154,628)             -
      Purchase of property and equipment             (1,569)          (2,417)
      Payments for patent enforcement costs             -             (1,233)
      Purchase of intangible assets                     -             (1,500)
      Sale of held-to-maturity securities            23,546              -
      Sale of available-for-sale
       securities                                    39,056              -
                                                ------------      -----------
    Net cash used in investing activities           (93,595)          (5,150)

    Cash flows from financing activities
      Proceeds from revolving credit
       facility                                      10,000              -
      Payments on revolving credit
       facility                                     (10,000)             -
      Proceeds from term loan                        57,522              -
      Payments on term loan                            (150)          (5,000)
      Payments on letters of credit                     -               (338)
      Excess tax benefits from stock-based
       compensation                                     -              1,568
      Proceeds from exercise of stock
       options                                        2,897            3,134
                                                ------------      -----------
    Net cash provided by (used in)
     financing activities                            60,269             (636)
                                                ------------      -----------
    Net decrease in cash and cash
     equivalents                                    (43,349)          (4,895)
    Cash and cash equivalents at beginning
     of period                                       75,895           30,776
                                                ------------      -----------
    Cash and cash equivalents at end of
     period                                         $32,546          $25,881
                                                ============      ===========


    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 23, 2007, 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.

    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-K filed on February 23, 2007 with the SEC. In addition, the forward- looking statements included in this press release represent the Company's views as of May 2, 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 May 2, 2007.

SOURCE  Blackboard Inc.
    -0-                             05/02/2007
    /CONTACT:  Michael J. Stanton, Vice President, Investor Relations of
Blackboard Inc., +1-202-463-4860 ext. 2305/
    /Web site:  http://www.blackboard.com
                http://investor.blackboard.com /
    (BBBB)

CO:  Blackboard Inc.
ST:  District of Columbia
IN:  STW CPR
SU:  ERN ERP CCA

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0875 05/02/2007 16:18 EDT http://www.prnewswire.com