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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