Blackboard Inc. Reports Second Quarter Revenue of $92.1 Million
- Revenue Increases 22 Percent Year-Over-Year -
- Company Raises Revenue, Non-GAAP Earnings and Cash Flow Guidance -
WASHINGTON, Aug. 5 /PRNewswire-FirstCall/ -- Blackboard Inc. (Nasdaq:
BBBB) today announced financial results for the second quarter ended June 30,
2009 and updated guidance for the third quarter and the full year of 2009.
Total revenue for the quarter ended June 30, 2009 was $92.1 million, an
increase of 22 percent over the second quarter of 2008. Product revenues for
the quarter were $83.4 million, an increase of 22 percent over the second
quarter of 2008, while professional services revenues for the quarter were
$8.7 million, an increase of 22 percent over the second quarter of 2008. The
increase in revenue was driven by strong growth in Blackboard's professional
services and managed hosting. The financial results for the second quarter
reflect the inclusion of ANGEL Learning, Inc. beginning May 9, 2009.
GAAP net loss was $4.1 million, resulting in net loss per basic and
diluted share of ($0.13) for the second quarter of 2009 compared to a net loss
of $134,000 and net loss per basic and diluted share of ($0.00) for the second
quarter of 2008. Non-GAAP adjusted net income for the second quarter of 2009,
which excludes the amortization of acquisition-related intangible assets,
stock-based compensation, non-cash patent related impairment charge, and
non-cash interest expense, all net of taxes, was $8.7 million, resulting in
non-GAAP adjusted net income per diluted share of $0.27 compared to non-GAAP
adjusted net income of $9.2 million and non-GAAP adjusted net income per
diluted share of $0.29 for the second quarter of 2008.
Impact of Certain Items on 2009 Second Quarter Results
Included in the second quarter 2009 GAAP net loss and non-GAAP net income
is a $3.5 million one-time charge related to the reversal of a 2008 patent
judgment. In addition, included in the second quarter 2009 GAAP net loss, but
excluded from non-GAAP net income, is a $7.5 million one-time non-cash charge
resulting from an impairment to capitalized patent costs. Also included in
the results for the second quarter of 2009 is a $1.1 million benefit to other
income (GAAP and Non-GAAP) from a gain on investment in a common stock warrant
held by the Company. The net impact of these items results in a $0.21
reduction in GAAP net income per basic and diluted share and a $0.06 reduction
in non-GAAP net income per diluted share for the quarter ended June 30, 2009.
"We are pleased with our financial results in the second quarter which,
excluding the impact of the litigation-related charges and our investment
gain, exceeded our prior financial guidance. We experienced solid demand for
our products and services during the quarter and continue to believe that
spending on education technology remains a priority, even in the current
economic environment," said Michael Chasen, CEO and President of Blackboard
Inc. "With the addition of ANGEL Learning and the launch of our new mobile
application platform, MobilEdu, we are expanding our business and product
offerings and strengthening our overall position."
Highlights from the Second Quarter of 2009
-- A few of Blackboard's new and expanded client relationships in the
quarter included:
-- U.S. Higher Education: Albany State University, Bishop State
Community College, Black Hills State University Carlow University,
Chemeketa Community College, Georgia Gwinnett College, Ivy Tech
Community College, Marshall University, Marygrove College,
Mississippi Association of Community and Junior Colleges, Nova
Southeastern University, Rowan University, The College of St.
Scholastica, University of Nebraska-Lincoln, University of
Southern California, University of Southern Mississippi and
others.
-- International: Charles Darwin University, Curtain University of
Technology, DUOC, Emmanuel Schools Foundation, National College of
Puerto Rico, Northampton University, Saxion Hogeschool, Swinburne
University, Taiwan American School, University Arts London,
University of Puerto Rico, Utrecht University and others.
-- K-12: Broward County Public School, Clay County School District,
Clear Creek Independent School District, Cobb County School
District, Fulton County Public Schools, Hamilton/Clermont
Cooperative Association, Jefferson County Public Schools, KC
Distance Learning, North Carolina Virtual Public School, Saskatoon
Public School District, Sioux Falls School District and others.
-- Professional Education (ProEd): Administrative Office of the U.S.
Courts, Air Force Special Operations School, American University
of Antigua College, Cadet Command, Carilion Health Systems, Civil
Air Patrol, Innova World Wide Institute, Institute of Nuclear
Power Operations, Laboratory Institute of Merchandising, Medela,
Inc., Naval War College, Northern Virginia Criminal Justice
Training Academy, PIMA Medical Institute, Substance Abuse & Mental
Health Services and others.
-- Blackboard completed its acquisition of ANGEL Learning, Inc., a
leading developer of e-learning software to the U.S. education
industry, for approximately $95 million, net of cash acquired and
excluding transaction costs.
Outlook for the Third Quarter and Full Year of 2009
Third Quarter of 2009:
-- Revenue of $95.0 to $98.0 million;
-- Stock-based compensation expense of approximately $4.2 million;
-- Amortization of acquired intangibles of approximately $9.2 million;
-- GAAP net income of $1.2 million to $3.3 million;
-- GAAP net income per diluted share of $0.04 to $0.10, which is based on
an estimated 32.9 million diluted shares, and an estimated effective
tax rate of approximately 33 percent;
-- Non-GAAP adjusted net income of $10.7 to $12.8 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 $0.33 to $0.39 based
on an estimated 32.9 million diluted shares and an estimated effective
tax rate of approximately 37 percent.
Full Year 2009:
-- Revenue of $369.0 to $375.0 million;
-- Stock-based compensation expense of approximately $16.1 million;
-- Amortization of acquired intangibles of approximately $34.9 million;
-- GAAP net income of $700,000 to $4.7 million;
-- GAAP net income per diluted share of $0.02 to $0.15, which is based on
an estimated 32.7 million diluted shares; and an estimated effective
tax rate of approximately 33 percent;
-- Non-GAAP adjusted net income of $41.0 to $45.1 million, which excludes
the amortization of acquisition-related intangible assets, stock-based
compensation, non-cash interest expense, and non-cash patent related
impairment charge, all net of taxes;
-- Non-GAAP adjusted net income per diluted share of $1.26 to $1.38 based
on an estimated 32.7 million diluted shares and an estimated effective
tax rate of approximately 38 percent; and
-- Cash flow from operations of $90.0 to $100.0 million.
Conference Call
Blackboard will broadcast its second 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.
A replay of the call will be available via telephone at approximately 7:00
p.m. (ET) on August 6, 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 74196349.
BLACKBOARD INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
------- -------
2008 2009 2008 2009
---- ---- ---- ----
Revenues:
Product $68,377 $83,381 $131,486 $163,507
Professional services 7,170 8,729 12,537 15,051
----- ----- ------ ------
Total revenues 75,547 92,110 144,023 178,558
Operating expenses:
Cost of product revenues,
excludes $4,572 and
$2,034 for the three months
ended June 30, 2008 and
2009, respectively, and
$8,660 and $5,672 for the
six months ended June 30,
2008 and 2009, respectively,
in amortization of acquired
technology included in
amortization of intangibles
resulting from acquisitions
shown below (1) 18,000 21,762 33,971 43,207
Cost of professional
services revenues (1) 5,134 4,703 10,084 9,470
Research and
development (1) 9,944 11,219 19,677 22,045
Sales and marketing (1) 22,763 25,771 43,620 49,713
General and
administrative (1) 12,461 14,238 25,215 27,840
Patent related (proceeds)
impairment and other
costs (3,313) 10,984 (3,313) 10,984
Amortization of
intangibles resulting
from acquisitions 9,729 7,861 18,408 16,446
----- ----- ------ ------
Total operating expenses 74,718 96,538 147,662 179,705
------ ------ ------- -------
Income (Loss) from
operations 829 (4,428) (3,639) (1,147)
Other (expense) income:
Interest expense (2) (3,088) (2,971) (6,070) (5,862)
Interest income 258 59 1,148 167
Other income 3,780 1,361 4,090 802
----- ----- ----- ---
Income (Loss) before
(provision) benefit for
income taxes (2) 1,779 (5,979) (4,471) (6,040)
(Provision) benefit for
income taxes (1,913) 1,907 (108) 1,930
------ ----- ---- -----
Net loss (2) $(134) $(4,072) $(4,579) $(4,110)
===== ======= ======= =======
Net loss per common share: (2)
Basic $(0.00) $(0.13) $(0.15) $(0.13)
====== ====== ====== ======
Diluted $(0.00) $(0.13) $(0.15) $(0.13)
====== ====== ====== ======
Weighted average number of common
shares:
Basic 30,981,113 31,920,282 30,574,931 31,571,009
========== ========== ========== ==========
Diluted 30,981,113 31,920,282 30,574,931 31,571,009
========== ========== ========== ==========
(1) Includes the following
amounts related to
stock-based compensation:
Cost of product revenues $258 $307 $435 $576
Cost of professional
services revenues 69 169 232 259
Research and development 190 258 352 485
Sales and marketing 1,665 1,541 3,081 3,124
General and administrative 1,615 1,676 3,378 3,495
(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 and six months ended June 30, 2008
have been adjusted to reflect additional amortization of debt discount
of $1,171 and $2,323, respectively. Interest expense, Income (Loss)
before (provision) benefit for income taxes, Net loss, and Net loss
per common share - Basic and Diluted have been adjusted accordingly
and were previously reported as $(1,917), $2,950, $1,037, and $0.03,
respectively, for the three months ended June 30, 2008. Interest
expense, Income (Loss) before (provision) benefit for income taxes,
Net loss, and Net loss per common share - Basic and Diluted have been
adjusted accordingly and were previously reported as $(3,747),
$(2,148), $(2,256), and $(0.07), respectively, for the six months
ended June 3
Reconciliation of GAAP Net Income (Loss) before (provision) benefit for
income taxes to Non-GAAP adjusted net income (3):
GAAP Net income (loss) before
(provision) benefit for
income taxes $1,779 $(5,979) $(4,471) $(6,040)
Add: Non-cash patent related
impairment - 7,447 - 7,447
Add: Amortization of
intangibles resulting
from acquisitions 9,729 7,861 18,408 16,446
Add: Stock-based
compensation 3,797 3,951 7,478 7,939
Add: Non-cash interest
expense 1,588 1,563 3,182 3,118
Adjusted provision for
income taxes (4) (7,673) (6,109) (11,191) (11,526)
------ ------ ------- -------
Non-GAAP adjusted net
income (5) $9,220 $8,734 $13,406 $17,384
====== ====== ======= =======
Non-GAAP adjusted net
income per common
share - diluted (5) $0.29 $0.27 $0.43 $0.54
===== ===== ===== =====
Weighted average number
of diluted common shares 31,939,435 32,585,621 31,506,943 32,206,099
========== ========== ========== ==========
(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 generally accepted accounting principles in
the US (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 45.4% and 41.2% for the three months ended June 30,
2008 and 2009, respectively, and approximately 45.5% and 39.9% for the
six months ended June 30, 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 Income (Loss) before
(provision) 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, patent related impairment
charges, and non-cash interest expense, all net of taxes.
BLACKBOARD INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
2008 2009
---- ----
(in thousands,
except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $141,746 $58,691
Accounts receivable, net 92,529 87,845
Inventories 1,783 1,675
Prepaid expenses and
other current assets (6) 8,361 13,469
Deferred tax asset, current portion 1,796 5,142
Deferred cost of revenues 7,126 7,407
----- -----
Total current assets 253,341 174,229
Deferred tax asset, noncurrent
portion (6) 18,897 10,477
Investment in common stock warrant 1,990 3,124
Restricted cash 4,249 4,169
Property and equipment, net 31,950 38,151
Other assets 549 1,196
Goodwill and intangible assets, net 338,976 416,069
------- -------
Total assets $649,952 $647,415
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,579 $6,484
Accrued expenses 27,879 31,150
Deferred rent, current portion 345 195
Deferred revenues, current portion 179,238 152,737
------- -------
Total current liabilities 210,041 190,566
Notes payable, net of debt discount (6) 149,923 153,041
Deferred rent, noncurrent portion 10,959 11,690
Deferred revenues, noncurrent portion 5,554 6,383
Stockholders' equity:
Common stock, $0.01 par value 314 320
Additional paid-in capital (6) 356,683 373,047
Accumulated deficit (6) (83,522) (87,632)
------- -------
Total stockholders' equity 273,475 285,735
------- -------
Total liabilities and
stockholders' equity $649,952 $647,415
======== ========
(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 - noncurrent portion, 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
Six Months Ended
June 30
-----------------
2008 2009
---- ----
(in thousands)
Cash flows from operating activities
Net loss (7) $(4,579) $(4,110)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Deferred income tax benefit (2,914) (3,964)
Excess tax benefits from stock-based compensation (1,021) (272)
Amortization of debt discount (7) 3,182 3,118
Depreciation and amortization 7,389 9,188
Amortization of intangibles resulting from
acquisitions 18,408 16,446
Patent related impairment charge - 7,447
Change in allowance for doubtful accounts 335 (1,123)
Stock-based compensation 7,478 7,939
Gain on investment in common stock warrant (3,980) (1,136)
Changes in operating assets and liabilities:
Accounts receivable (33,482) 8,436
Inventories 308 108
Prepaid expenses and other current assets (7) (3,488) (4,812)
Deferred cost of revenues 1,023 (281)
Accounts payable (2,544) 3,846
Accrued expenses (295) 1,329
Deferred rent 6,186 581
Deferred revenues 3,148 (28,886)
----- -------
Net cash (used in) provided by operating
activities (4,846) 13,854
Cash flows from investing activities
Purchases of property and equipment (17,358) (12,940)
Payments for patent enforcement costs (2,448) (414)
Purchase of available-for-sale investments - (6,586)
Redemptions of available-for-sale investments - 6,586
Acquisitions, net of cash acquired (132,902) (86,164)
-------- -------
Net cash used in investing activities (152,708) (99,518)
Cash flows from financing activities
Payments on letters of credit (27) -
Release of letters of credit - 80
Excess tax benefits from stock-based compensation 1,021 272
Proceeds from exercise of stock options 5,297 2,257
----- -----
Net cash provided by financing activities 6,291 2,609
----- -----
Net decrease in cash and cash equivalents (151,263) (83,055)
Cash and cash equivalents at beginning of period 206,558 141,746
------- -------
Cash and cash equivalents at end of period $55,295 $58,691
======= =======
(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 $(2,256), $887, and $(3,516),
respectively, for the six months ended June 30, 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 third 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-Q
filed on May 7, 2009 with the SEC. In addition, the forward-looking statements
included in this press release represent the Company's views as of August 5,
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 August 5, 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 or impairment of 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, non-cash patent related impairment charges, non-cash interest expense
and other items as determined by the Board of Directors.
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 May 7, 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- 08/05/2009
/CONTACT: For Financial Media and Investors: Michael J. Stanton, Senior
Vice President, Investor Relations of Blackboard Inc., +1-202-463-4860 ext.
2305; or Staci Strauss Mortenson, Senior Vice President, ICR, +1-203-682-8273;
or for Education & General Media: Matthew Maurer, Director, Public Relations
of Blackboard Inc., +1-202-463-4860 ext. 2637, matthew.maurer@blackboard.com/
/Web Site: http://www.blackboard.com /
(BBBB)
CO: Blackboard Inc.
ST: District of Columbia
IN: CPR EDU HED
SU: ERN CCA ERP
PR
-- PH57395 --
1195 08/05/2009 16:00 EDT http://www.prnewswire.com