- Fourth Quarter Revenue Increases 44 Percent to $51.4 million -
WASHINGTON, Feb. 6 /PRNewswire-FirstCall/ -- Blackboard Inc.
(NASDAQ:BBBB) today announced financial results for the fourth
quarter and year ended December 31, 2006 and updated guidance for
the first quarter and full year 2007. Blackboard's fourth quarter
revenue was $51.4 million, an increase of 44 percent over the same
period in 2005. The increase in revenue was driven by strong growth
in Blackboard's annual licensing of enterprise level products to
global academic institutions including clients resulting from the
acquisition of WebCT, Inc., which closed on February 28, 2006.
Product revenue in the fourth quarter was $46.8 million, an
increase of 46 percent over the $32.0 million of product revenue
last year. Professional services revenue for the quarter was $4.6
million, which represents an increase of 25 percent over the same
period in 2005. Net income in the fourth quarter was $201,000,
resulting in net income per basic and diluted share of $0.01.
Non-GAAP cash net income, which excludes the amortization of
acquired intangibles, stock-based compensation expense and the
associated tax impact, was $4.6 million in the fourth quarter
resulting in a non-GAAP cash net income per diluted share of $0.16.
"This was a tremendous year for Blackboard and our industry," said
Michael Chasen, chief executive officer and president for
Blackboard. "In 2006, we were able to significantly expand our
client relationships through the acquisition and successful
integration of WebCT while continuing to deliver innovative
technologies and leading client support and services." Total
revenue for the year ended December 31, 2006 was $183.1 million, an
increase of 35 percent over 2005. Net loss was $10.7 million in
2006, resulting in a net loss per basic and diluted share of $0.39.
Non-GAAP cash net income in 2006, which excludes the amortization
of acquired intangibles, stock-based compensation expense and the
associated tax impact, was $6.5 million, resulting in a non-GAAP
cash net income per diluted share of $0.22. Additionally,
Blackboard prepaid $35.0 million in principal on acquisition debt
in 2006. Highlights from the Fourth Quarter of 2006 * Blackboard's
new and expanding client relationships in the quarter included: --
U.S. Higher Education: Iowa State University, North Carolina
Community College System, Pima Community College, Portland
Community College, Salt Lake Community College, San Diego Community
College District, Seton Hall University, Texas A&M University -
College Station, The Board of Trustees of the University of
Alabama, The College of New Jersey, University of Alabama at
Huntsville, University of Florida Board of Trustees, University of
Houston, University of Massachusetts Amherst, University of North
Alabama and Weber State University. -- International: Flinders
University of South Australia, Keele University, La Trobe
University, Leeds Metropolitan University, London Metropolitan
University, Middlesex University, Napier University, Queensland
University of Technology, Sheffield Hallam University, Universidad
de Sevilla, University of Canterbury, University of East London,
University of Melbourne, University of Portsmouth, University of
Sheffield, University of Stellenbosch and University of Tasmania.
-- K-12: Amarillo Independent School District (TX), Broward County
Public Schools (FL), Clear Creek Independent School District (TX),
Cuyahoga Heights Schools (OH), Illinois State University Lab School
(IL), Monroe County Public Schools (FL), Naperville CUSD 203 (IL),
North East Florida Educational Consortium (FL), PAIS/BOA (PA),
Pasadena Independent School District (CA), Pittsylvania County
Schools (VA), Polk County Public Schools (FL), Rocky Hill School
(RI), St. James Parish School Board (LA) and The School District of
Palm Beach County (FL). Highlights from the Year End 2006 *
Blackboard completed its acquisition of WebCT, Inc. on February 28,
2006 marking a major milestone in the education industry. *
Blackboard ended 2006 with 3,462 clients representing an increase
of 53 percent over 2005. * Blackboard's enterprise-class licenses
(Blackboard Learning System(TM) - Enterprise, Blackboard Community
System(TM), Blackboard Transaction System(TM) and the Blackboard
Content System(TM)), totaled 3,492 at the end of 2006, which
represents an increase of 67 percent over 2005. * Blackboard
launched the Blackboard Beyond Initiative(TM), which is focused on
developing a series of Web properties that connect the
institutions, faculty, and students who use Blackboard applications
worldwide across education segments and disciplines. * Blackboard's
BbOne(SM) offering is now in use at 65 U.S. higher education
institutions. As of December 31, 2006, more than 1,000 off- campus
merchants are now accepting BbOne as a form of payment. Notice of
Change to Financial Guidance Beginning in the first quarter of 2007
Blackboard management will begin providing financial guidance and
reporting on two new non-GAAP financial measures: "Non-GAAP
Adjusted Net Income" and "Non-GAAP Adjusted Net Income per Share,"
which exclude the amortization of acquired intangibles and the
associated tax impact. These new measures will replace "Non-GAAP
Cash Net Income" and "Non-GAAP Cash Net Income per Share," which
the Company had previously provided. For the purpose of future
comparisons, Blackboard is providing Non-GAAP Adjusted Net Income
(Loss) and Non-GAAP Adjusted Net Income (Loss) per Share for 2006.
Below is historical reconciliation of income (loss) before benefit
(provision) for income taxes to Non-GAAP Adjusted Net Income (Loss)
(1): Q1 2006 Q2 2006 Q3 2006 Q4 2006 FY 2006 ------- -------
------- ------- ------- (unaudited and denoted in thousands except
per share amounts) Income (loss) before benefit (provision) for
income taxes $218 $(9,023) $(6,775) $261 $(15,319) Add:
Amortization of intangibles resulting from acquisitions 1,837 5,377
5,377 5,378 17,969 Adjusted (provision) benefit for income taxes
(2) (812) 1,440 552 (2,227) (1,047) ------- ------- ------- -------
------- Non-GAAP adjusted net income (loss) $1,243 $(2,206) $(846)
$3,412 $1,603 ======= ======= ======= ======= ======= Non-GAAP
adjusted net income (loss) per common share - diluted $0.04 $(0.08)
$(0.03) $0.12 $0.06 ======= ======= ======= ======= ======= (1)
Non-GAAP adjusted net income and non-GAAP adjusted net income per
share are non-GAAP financial measures and have no standardized
measurement prescribed by GAAP. Management believes that both
measures provide additional useful information to investors
regarding the Company's ongoing financial condition and results of
operations and since the Company has historically reported these
non-GAAP results they provide an additional basis for comparisons
to prior periods. The non-GAAP financial measures may not be
comparable with similar non-GAAP financial measures used by other
companies and should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with
GAAP. The Company provides the above reconciliation to the most
directly comparable GAAP financial measure to allow investors to
appropriately consider each non-GAAP financial measure. (2)
Adjusted (provision) benefit for income taxes is applied at an
effective rate of 39.5%. Financial Guidance for 2007 First Quarter
of 2007: * Revenue of $53.0 to $54.2 million; * Amortization of
acquired intangibles of approximately $5.4 million; * Net income of
$1.3 to $1.8 million, resulting in net income per diluted share of
$0.04 to $0.06, which is based on an estimated 29.5 million diluted
shares and an effective tax rate of 41.5 percent; and * Non-GAAP
adjusted net income excluding the amortization of acquired
intangibles and the associated tax impact, of $4.4 to $4.9 million,
resulting in non-GAAP adjusted net income per diluted share of
$0.15 to $0.17 based on an estimated 29.5 million diluted shares
and an effective tax rate of 41.5 percent. Full Year 2007: *
Revenue of $230 to $235 million; * Amortization of acquired
intangibles of approximately $22 million; * Net income of $10 to
$12 million, resulting in net income per diluted share of $0.33 to
$0.40, which is based on an estimated 30 million diluted shares and
an effective tax rate of 41.5 percent; and * Non-GAAP adjusted net
income excluding the amortization of acquired intangibles and the
associated tax impact, of $22.5 to $24.5 million, resulting in
non-GAAP adjusted net income per diluted share of $0.75 to $0.82
based on an estimated 30 million diluted shares and an effective
tax rate of 41.5 percent. Conference Call Blackboard will broadcast
its fourth quarter conference call live over the Internet today
beginning at 4:30 p.m. (Eastern). Interested parties can access the
webcast through the Investor Relations section of the Company's Web
site at http://investor.blackboard.com/. Please access the Web site
at least 15 minutes prior to the start of the call to register,
download and install any necessary software. A replay of the call
will be available via telephone from approximately 7:00 p.m.
Eastern (4:00 p.m. Pacific) on February 6, 2007 until 11:00 p.m.
Eastern (8:00 p.m. Pacific) on February 13, 2007. To listen to the
replay, participants in the U.S. and Canada should dial
888-286-8010, and international participants should dial +1 (617)
801-6888. The conference ID for the replay is 86268897. BLACKBOARD
INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except
share and per share amounts) Three Months Ended Year Ended December
31, December 31, ------------------------------------------------
2005 2006 2005 2006 ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) Revenues: Product $32,048
$46,795 $120,389 $160,392 Professional services 3,698 4,625 15,275
22,671 ----------- ----------- ----------- ----------- Total
revenues 35,746 51,420 135,664 183,063 Operating expenses: Cost of
product revenues, excludes $2,800 and $9,333 in amortization of
acquired technology included in amortization of intangibles
resulting from acquisitions shown below for the three and twelve
months ended December 31, 2006, respectively (1) 7,789 10,246
29,607 39,594 Cost of professional services revenues (1) 2,721
3,940 10,220 16,001 Research and development (1) 3,783 7,005 13,945
27,162 Sales and marketing (1) 9,604 14,420 37,873 58,340 General
and administrative (1) 4,842 8,760 19,306 35,823 Amortization of
intangibles resulting from acquisitions 66 5,378 266 17,969
----------- ----------- ----------- ----------- Total operating
expenses 28,805 49,749 111,217 194,889 ----------- -----------
----------- ----------- Income (loss) from operations 6,941 1,671
24,447 (11,826) Other income (expense): Interest expense (10)
(1,598) (49) (5,354) Interest income 1,207 406 3,146 2,380 Other
expense - (218) - (519) ----------- ----------- -----------
----------- Income (loss) before benefit (provision) for income
taxes 8,138 261 27,544 (15,319) Benefit (provision) for income
taxes 14,973 (60) 14,309 4,582 ----------- ----------- -----------
----------- Net income (loss) $23,111 $201 $41,853 $(10,737)
=========== =========== =========== =========== Net income (loss)
per common share: Basic $0.85 $0.01 $1.57 $(0.39) ===========
=========== =========== =========== Diluted $0.79 $0.01 $1.47
$(0.39) =========== =========== =========== =========== Weighted
average number of common shares: Basic 27,273,665 28,144,314
26,714,748 27,857,576 =========== =========== ===========
=========== Diluted 29,214,963 29,113,413 28,509,777 27,857,576
=========== =========== =========== =========== (1) Includes the
following amounts related to stock- based compensation: Cost of
product revenues $- $109 $- $386 Cost of professional services
revenues - 5 - 524 Research and development - 289 - 733 Sales and
marketing - 712 - 2,951 General and administrative 20 903 75 3,462
Reconciliation of income (loss) before benefit (provision) for
income taxes to non-GAAP cash net income (2): Income (loss) before
benefit (provision) for income taxes $8,138 $261 $27,544 $(15,319)
Add: Amortization of intangibles resulting from acquisitions 66
5,378 266 17,969 Add: Stock-based compensation 20 2,018 75 8,056
Adjusted provision for income taxes (3) (3,248) (3,025) (11,015)
(4,229) ----------- ----------- ----------- ----------- Non-GAAP
cash net income $4,976 $4,632 $16,870 $6,477 ===========
=========== =========== =========== Non-GAAP cash net income per
common share - diluted $0.17 $0.16 $0.59 $0.22 ===========
=========== =========== =========== Adjusted weighted average
number of common shares - diluted 29,214,963 29,113,413 28,509,777
28,988,839 =========== =========== =========== =========== (2)
Non-GAAP cash net income and non-GAAP cash net income per share are
non-GAAP financial measures and have no standardized measurement
prescribed by GAAP. Management believes that both measures provide
additional useful information to investors regarding the Company's
ongoing financial condition and results of operations and since the
Company has historically reported these non-GAAP results they
provide an additional basis for comparisons to prior periods. The
non-GAAP financial measures may not be comparable with similar
non-GAAP financial measures used by other companies and should not
be considered in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. The Company provides
the above reconciliation to the most directly comparable GAAP
financial measure to allow investors to appropriately consider each
non-GAAP financial measure. (3) Adjusted provision for income taxes
is applied at an effective rate of 39.5% for the three months ended
December 31, 2005 and 2006, respectively, and 39.5% for the year
ended December 31, 2005 and 2006, respectively. BLACKBOARD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS December 31, December 31,
2005 2006 --------------- --------------- (unaudited) (in
thousands, except per share amounts) ASSETS Current assets: Cash
and cash equivalents $75,895 $30,776 Short-term investments 62,602
- Accounts receivable, net 26,136 52,394 Inventories 1,806 2,377
Prepaid expenses and other current assets 2,116 3,514 Deferred tax
asset, current portion 10,274 8,883 Deferred cost of revenues,
current portion 5,797 7,983 --------------- --------------- Total
current assets 184,626 105,927 Deferred tax asset, noncurrent
portion 12,023 23,874 Deferred cost of revenues, noncurrent portion
1,310 4,253 Deferred merger costs (WebCT, Inc.) 4,956 - Restricted
cash 521 1,999 Property and equipment, net 9,940 12,761 Goodwill
10,252 101,644 Intangible assets, net 560 56,841 ---------------
--------------- Total assets $224,188 $307,299 ===============
=============== LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $1,833 $2,238 Accrued expenses 14,083
20,519 Term loan, current portion - 246 Deferred rent, current
portion 347 371 Deferred revenues, current portion 74,975 117,972
--------------- --------------- Total current liabilities 91,238
141,346 Term loan, noncurrent portion, net of debt discount -
23,377 Deferred rent, noncurrent portion 426 157 Deferred revenues,
noncurrent portion 2,199 2,298 Stockholders' equity: Common stock,
$0.01 par value 275 282 Additional paid-in capital 210,805 231,331
Accumulated deficit (80,755) (91,492) ---------------
--------------- Total stockholders' equity 130,325 140,121
--------------- --------------- Total liabilities and stockholders'
equity $224,188 $307,299 =============== =============== BLACKBOARD
INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31,
------------------------------ 2005 2006 ------------ ------------
(unaudited) (in thousands) Cash flows from operating activities Net
income (loss) $41,853 $(10,737) Adjustments to reconcile net income
(loss) to net cash provided by operating activities: Deferred
income tax benefit (14,799) (6,657) Excess tax benefits from
stock-based compensation - (3,317) Amortization of debt discount -
1,701 Depreciation and amortization 6,867 8,980 Amortization of
intangibles resulting from acquisitions 266 17,969 Change in
allowance for doubtful accounts (253) (109) Noncash stock-based
compensation 75 8,056 Changes in operating assets and liabilities:
Accounts receivable (4,197) (21,780) Inventories 188 (571) Prepaid
expenses and other current assets (910) (42) Deferred cost of
revenues (2,191) (5,129) Accounts payable 719 133 Accrued expenses
2,373 (5,087) Deferred rent (294) (245) Deferred revenues 10,116
38,640 ------------ ------------ Net cash provided by operating
activities 39,813 21,805 Cash flows from investing activities
Acquisition of WebCT, Inc., net of cash acquired - (153,547)
Payments for merger costs (WebCT, Inc.) (2,536) - Purchase of
property and equipment (7,959) (10,081) Payments for patent
enforcement costs - (276) Purchase of held-to-maturity securities
(33,296) - Sale of held-to-maturity securities 9,750 23,546
Purchase of available-for-sale securities (55,306) - Sale of
available-for-sale securities 36,250 39,056 ------------
------------ Net cash used in investing activities (53,097)
(101,302) Cash flows from financing activities Proceeds from
revolving credit facility (762) 10,000 Payments on revolving credit
facility - (10,000) Proceeds from term loan - 57,522 Payments on
term loan - (35,600) Release of letter of credit - 1,777 Payments
on letters of credit (1,798) Excess tax benefits from stock-based
compensation - 3,317 Proceeds from exercise of stock options 11,792
9,160 ------------ ------------ Net cash provided by financing
activities 11,030 34,378 ------------ ------------ Net decrease in
cash and cash equivalents (2,254) (45,119) Cash and cash
equivalents at beginning of period 78,149 75,895 ------------
------------ Cash and cash equivalents at end of period $75,895
$30,776 ============ ============ Use of Non-GAAP Financial
Measures This release includes information about the Company's
non-GAAP cash net income, non-GAAP cash net income per share,
non-GAAP adjusted net income and non-GAAP adjusted net income per
share which are non-GAAP financial measures. Management believes
that both measures, which exclude amortization of acquired
intangibles, stock-based compensation expense, and the associated
tax impact, provide additional useful information to investors
regarding the Company's ongoing financial condition and results of
operations and aspects of current operating performance which can
be effectively managed. Since the Company has historically reported
these non-GAAP results to the investment community, management also
believes the inclusion of these non-GAAP financial measures
provides consistency in its financial reporting and facilitates
investors' understanding of the Company's historic operating trends
by providing an additional basis for comparisons to prior periods.
In addition, the Company's internal reporting, including
information provided to the Company's Audit Committee and Board of
Directors, contains non-GAAP measures. The Company has also adopted
internal compensation metrics that are determined on a basis that
excludes amortization of acquired intangibles, stock-based
compensation expense, and the associated tax impact. A material
limitation associated with the use of the above non-GAAP financial
measures is that they have no standardized measurement prescribed
by GAAP and may not be comparable with similar non-GAAP financial
measures used by other companies. The Company compensates for these
limitations by providing full disclosure of each non-GAAP financial
measure and reconciliation to the most directly comparable GAAP
financial measure which investors can use to appropriately consider
each financial measure determined under GAAP as well as on the
adjusted non-GAAP basis. However, the non-GAAP financial measures
should not be considered in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. In addition
to the information contained in this release, investors should also
review information contained in the Company's Form 10-Q dated
November 9, 2006, as well as other filings with the Securities and
Exchange Commission when assessing the Company's financial
condition and results of operations. About Blackboard Inc.
Blackboard Inc. (NASDAQ:BBBB) is a leading provider of enterprise
software applications and related services to the education
industry. Founded in 1997, Blackboard enables educational
innovations everywhere by connecting people and technology.
Millions of people use Blackboard everyday at academic institutions
around the globe, including colleges, universities, K-12 schools
and other education providers, as well as textbook publishers and
student- focused merchants that serve education providers and their
students. Blackboard is headquartered in Washington, D.C., with
offices in North America, Europe, Australia and Asia.
http://www.blackboard.com/ Blackboard Educate. Innovate.
Everywhere.(TM) Any statements in this press release about future
expectations, plans and prospects for Blackboard and other
statements containing the words "believes," "anticipates," "plans,"
"expects," "will," and similar expressions, constitute
forward-looking statements within the meaning of The Private
Securities Litigation Reform Act of 1995. Actual results may differ
materially from those indicated by such forward-looking statements
as a result of various important factors, including the factors
discussed in the "Risk Factors" section of our Form 10-Q filed on
November 9, 2006 with the SEC. In addition, the forward- looking
statements included in this press release represent the Company's
views as of February 6, 2007. The Company anticipates that
subsequent events and developments will cause the Company's views
to change. However, while the Company may elect to update these
forward-looking statements at some point in the future, the Company
specifically disclaims any obligation to do so. These
forward-looking statements should not be relied upon as
representing the Company's views as of any date subsequent to
February 6, 2007. DATASOURCE: Blackboard Inc. CONTACT: Michael J.
Stanton, Vice President, Investor Relations of Blackboard Inc.,
+1-202-463-4860 ext. 2305 Web site: http://www.blackboard.com/
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