Blackboard Inc. First Quarter
Revenue Increases 24 Percent to $68.5 Million
First Quarter 2008 Revenue and Earnings Exceed Guidance
NTI and WebCT Cross-Selling Begins
WASHINGTON, May 7 /PRNewswire-FirstCall/ -- Blackboard Inc. (
NASDAQ:BBBB
) today announced financial results for the first quarter ended March 31,
2008 and updated guidance for the second quarter and the full year of
2008.
Total revenue for the quarter ended March 31, 2008 was
$68.5 million, an increase of 24 percent over the first quarter of 2007.
Product revenues for the quarter were $63.1 million, an increase of 26
percent over the first quarter of 2007, while professional services
revenues for the quarter were $5.4 million, an increase of 1% over the
first quarter of 2007.
Net loss was $3.3 million, resulting in a net loss per
basic and diluted share of ($0.11) for the first quarter of 2008 compared
to net income of $1.9 million and net income per basic and diluted share
of $0.07 for the first quarter of 2007. Non-GAAP adjusted net income for
the first quarter of 2008, which excludes the amortization of
acquisition-related intangible assets, net of taxes, was $2.0 million,
resulting in non-GAAP adjusted net income per diluted share of $0.06
compared to non-GAAP adjusted net income of $5.2 million and non-GAAP
adjusted net income per diluted share of $0.18 for the first quarter of
2007.
"We had strong financial results to begin 2008 with
our revenue and earnings significantly beating our original
guidance," said Michael Chasen, chief executive officer and president
for Blackboard. "Our revenue over- performance was driven by
continued strong growth in our licensing and managed hosting sales and due
to better than expected results from our acquisition of The NTI
Group."
Highlights from the First Quarter of 2008
"Our sales team maintained their focus during the
first quarter of the NTI acquisition integration and sales training,"
added Chasen. "We had a meaningful increase in the average deal size
closed in the quarter and I was proud of the cross-selling activity that
took place with former WebCT clients as well as our ability to sell our
new Blackboard Connect(TM) offering into the U.S. higher education
market."
-- A few of Blackboard's new and expanded client relationships in the
quarter included:
-- U.S. Higher Education: Charleston Southern University, Clemson
University, Delgado Community College, Edison College, Georgia
Institute of Technology, Hillsborough Community College,
Louisiana Tech University, Metropolitan Community College,
Monroe County Community College, New York University, Owens
Community College, Princeton Theological Seminary, Purdue
University, Saint Peters College, University of Miami,
University System of Georgia, Virginia Community College System,
Wake Tech Community College and others.
-- International: Aston University, Caribbean University, Dublin
City University, Japan Women's University, Kanagawa Prefectual
Board of Education, Kanto Gakuin University, Kuanas University
of Technology, Osaka University, Ritsumeikan University,
Takushoku University, Universidad Espiritu Santo, Universidad
Ibero Americana, University of Sydney, University of Sharja,
University of Staffordshire, University of Wollongong and
others.
-- K-12: Atlanta Public Schools (GA), Commonwealth Governor's
School (VA), Connecticut Distance Learning (CT), Fairfax County
Public Schools (VA), Lubbock Independent School District (TX),
Pasadena Independent School District (CA), Richard Milburn High
School (VA), Rochester Public Schools (NY) and others.
-- Capella University, George Mason University, McMaster University, and
Villanova University were among the first former-WebCT clients to
purchase the Blackboard Community System(TM) and/or the Blackboard
Content System(TM).
-- Blackboard completed the acquisition of The NTI Group, Inc., a leading
provider of mass messaging and notifications solutions for educational
and government organizations via voice, email, SMS, and other text-
receiving devices and brought to market the new Blackboard Connect
offering.
-- In the quarter, there were nearly 150 new Blackboard Connect deals
closed and more than twenty Blackboard Connect deals were closed with
existing Blackboard U.S. higher education clients.
-- Blackboard Learning System(TM) 8 for former WebCT clients was released
addressing the remaining outstanding product issues and bringing to
market the most stable and scalable eLearning platform to date.
-- Blackboard announced the opening of a new datacenter in Mascot, New
South Wales, Australia.
-- Blackboard launched Blackboard Educator Central(TM), a comprehensive
and fully-hosted professional development solution designed to help
districts to affordably manage, deliver and evaluate professional
development and build powerful educator communities of practice.
Outlook for the Second Quarter and Full Year of 2008
"Our team is focused on solid execution across our
entire business including the continued successful integration of NTI,"
commented Michael Chasen. "We expect that the global education
industry will remain strong and that Blackboard is well positioned for
another great year."
Blackboard is providing the following financial guidance
for the second quarter and full year 2008. Investors should note that the
Company is also adjusting net interest expense to reflect the impact of
lower interest rates on our cash and investments. The Company expects that
net interest expense will be approximately $2.7 million higher than our
original 2008 guidance.
Second Quarter of 2008:
-- Revenue of $74.8 to $76.8 million;
-- Amortization of acquired intangibles of approximately $9.9 million;
-- Net loss of ($2.9) to ($2.1) million, resulting in net loss per basic
share of ($0.09) to ($0.06), which is based on an estimated 31.1
million basic shares and an estimated effective tax rate of 35 percent;
and
-- Non-GAAP adjusted net income, excluding the amortization of acquired
intangibles and the associated tax impact, of $3.2 to $4.0 million,
resulting in non-GAAP adjusted net income per diluted share of $0.10 to
$0.13 based on an estimated 31.9 million diluted shares and an
estimated effective tax rate of 39 percent.
Full Year 2008:
-- Revenue of $310.5 to $316.5 million;
-- Amortization of acquired intangibles of approximately $38.3 million,
which is $700,000 higher than our initial 2008 guidance as a result of
our final valuation of NTI's intangibles;
-- Net interest expense of approximately $5.3 million;
-- Net loss of $(3.9) to $(1.5) million, resulting in net loss per basic
share of ($0.13) to ($0.05), which is based on an estimated 31.5
million basic shares and an estimated effective tax rate of 35 percent;
and
-- Non-GAAP adjusted net income excluding the amortization of acquired
intangibles and the associated tax impact, of $19.5 to $21.9 million,
resulting in non-GAAP adjusted net income per diluted share of $0.61 to
$0.69 based on an estimated 31.9 million diluted shares and an
estimated effective tax rate of 39 percent.
BLACKBOARD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Three Months Ended
March 31,
-----------------------------
2007 2008
(unaudited) (unaudited)
----------- -----------
Revenues:
Product $49,981 $63,109
Professional services 5,299 5,366
----------- -----------
Total revenues 55,280 68,475
Operating expenses:
Cost of product revenues, excludes
$2,825 and $4,078 in amortization
of acquired technology included in
amortization of intangibles
resulting from acquisitions shown
below, respectively (1) 11,697 15,970
Cost of professional services
revenues (1) 3,764 4,948
Research and development (1) 6,953 9,733
Sales and marketing (1) 14,546 20,859
General and administrative (1) 9,317 12,753
Amortization of intangibles
resulting from acquisitions 5,399 8,679
----------- -----------
Total operating expenses 51,676 72,942
----------- -----------
Income (loss) from operations 3,604 (4,467)
Other (expense) income:
Interest expense (758) (1,830)
Interest income 405 890
Other income 73 310
----------- -----------
Income (loss) before (provision)
benefit for income taxes 3,324 (5,097)
(Provision) benefit for income taxes (1,380) 1,804
----------- -----------
Net income (loss) $1,944 $(3,293)
=========== ===========
Net income (loss) per common share:
Basic $0.07 $(0.11)
=========== ===========
Diluted $0.07 $(0.11)
=========== ===========
Weighted average number of common
shares:
Basic 28,351,872 30,247,568
=========== ===========
Diluted 29,428,043 30,247,568
=========== ===========
(1) Includes the following amounts
related to stock-based compensation:
Cost of product revenues $129 $176
Cost of professional services
revenues 116 163
Research and development 117 162
Sales and marketing 491 1,416
General and administrative 1,359 1,763
Reconciliation of income (loss)
before (provision) benefit for
income taxes to non-GAAP adjusted
net income (2):
Income (loss) before (provision)
benefit for income taxes $3,324 $(5,097)
Add: Amortization of intangibles
resulting from acquisitions 5,399 8,679
Adjusted provision for income taxes (3) (3,512) (1,624)
----------- -----------
Non-GAAP adjusted net income $5,211 $1,958
=========== ===========
Non-GAAP adjusted net income per
common share - diluted $0.18 $0.06
=========== ===========
(2) Non-GAAP adjusted net income and non-GAAP adjusted net income per
share are non-GAAP financial measures and have no standardized
measurement prescribed by GAAP. Management believes that both
measures provide additional useful information to investors regarding
the Company's ongoing financial condition and results of operations
and since the Company has historically reported these non-GAAP results
they provide an additional basis for comparisons to prior periods.
The non-GAAP financial measures may not be comparable with similar
non-GAAP financial measures used by other companies and should not be
considered in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. The Company provides
the above reconciliation to the most directly comparable GAAP
financial measure to allow investors to appropriately consider each
non-GAAP financial measure.
(3) Adjusted provision for income taxes is applied at an effective rate of
approximately 40.3% and 45.3% for the three months ended March 31,
2007 and 2008, respectively.
BLACKBOARD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31,
2007 2008
(unaudited)
------------ ------------
(in thousands,
except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $206,558 $62,366
Accounts receivable, net 52,846 53,097
Inventories 2,089 1,855
Prepaid expenses and other current
assets 5,255 7,362
Deferred tax asset, current
portion 6,549 6,965
Deferred cost of revenues, current
portion 6,793 5,682
------------ ------------
Total current assets 280,090 137,327
Deferred tax asset, noncurrent portion 34,154 14,667
Deferred cost of revenues, noncurrent
portion 84 238
Restricted cash 4,015 4,015
Property and equipment, net 18,584 28,315
Goodwill and intangible assets, net 168,349 369,299
------------ ------------
Total assets $505,276 $553,861
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,747 $7,554
Accrued expenses 24,182 23,634
Deferred rent, current portion 160 415
Deferred revenues, current portion 126,600 114,946
------------ ------------
Total current liabilities 154,689 146,549
Notes payable, net of debt discount 161,519 161,978
Deferred rent, noncurrent portion 1,469 2,683
Deferred revenues, noncurrent portion 2,925 2,474
Stockholders' equity:
Common stock, $0.01 par value 292 309
Additional paid-in capital 263,582 322,361
Accumulated deficit (79,200) (82,493)
------------ ------------
Total stockholders' equity 184,674 240,177
------------ ------------
Total liabilities and stockholders'
equity $505,276 $553,861
============ ============
BLACKBOARD INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
-----------------------------
2007 2008
(unaudited) (unaudited)
----------- -----------
(in thousands)
Cash flows from operating activities
Net income (loss) $1,944 $(3,293)
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Deferred income tax provision
(benefit) 883 (1,671)
Excess tax benefits from stock-based
compensation (1,568) (563)
Amortization of debt discount 211 459
Depreciation and amortization 2,512 3,316
Amortization of intangibles
resulting from acquisitions 5,399 8,679
Change in allowance for doubtful
accounts 43 30
Noncash stock-based compensation 2,212 3,680
Changes in operating assets and
liabilities, net of effect of
acquisitions:
Accounts receivable 11,709 7,842
Inventories 317 234
Prepaid expenses and other current
assets (85) (1,033)
Deferred cost of revenues 1,234 957
Accounts payable 1,830 457
Accrued expenses (4,856) (4,469)
Deferred rent (106) 1,469
Deferred revenues (20,788) (22,149)
----------- -----------
Net cash provided by (used in)
operating activities 891 (6,055)
Cash flows from investing activities
Acquisitions, net of cash acquired - (131,923)
Purchase of property and equipment (2,417) (7,944)
Payments for patent enforcement
costs (1,233) (635)
Purchase of intangible assets (1,500) -
----------- -----------
Net cash used in investing activities (5,150) (140,502)
Cash flows from financing activities
Payments on term loan (5,000) -
Payments on letters of credit (338) -
Excess tax benefits from stock-based
compensation 1,568 563
Proceeds from exercise of stock
options 3,134 1,802
----------- -----------
Net cash (used in) provided by
financing activities (636) 2,365
----------- -----------
Net decrease in cash and cash
equivalents (4,895) (144,192)
Cash and cash equivalents at beginning
of period 30,776 206,558
----------- -----------
Cash and cash equivalents at end of
period $25,881 $62,366
=========== ===========
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.
Blackboard
Educate. Innovate. Everywhere.(TM)
Source: Blackboard Inc.
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