- Fourth Quarter Revenue Increases 35 Percent to $85.0 Million -
WASHINGTON, Feb. 4 /PRNewswire-FirstCall/ -- Blackboard Inc.
(NASDAQ: BBBB) today announced financial results for the fourth
quarter and year ended December 31, 2008 and guidance for the first
quarter and full year 2009. Blackboard's fourth quarter revenue was
$85.0 million, an increase of 35 percent over the same period in
2007. Product revenue in the fourth quarter was $77.4 million, an
increase of 35 percent over the $57.4 million of product revenue in
the fourth quarter of last year. Professional services revenue for
the quarter was $7.6 million, which represents an increase of 30
percent over the same period in 2007. Blackboard's fourth quarter
revenue was $85.0 million, an increase of 35 percent over the same
period in 2007. Product revenue in the fourth quarter was $77.4
million, an increase of 35 percent over the $57.4 million of
product revenue last year. Professional services revenue for the
quarter was $7.6 million, which represents an increase of 30
percent over the same period in 2007. GAAP net income was $3.0
million for the fourth quarter of 2008 compared to GAAP net income
of $4.2 million in the same period last year. GAAP net income per
basic share was $0.10 and GAAP net income per diluted share was
$0.09 compared to GAAP net income per basic and diluted share of
$0.14 in the same period last year. Non-GAAP adjusted net income
for the fourth quarter of 2008, which excludes the amortization of
acquisition-related intangible assets, net of taxes, was $8.9
million, resulting in non-GAAP adjusted net income per diluted
share of $0.28 compared to non-GAAP adjusted net income of $7.7
million and non-GAAP adjusted net income per diluted share of $0.25
for the fourth quarter of 2007. Total revenue for the year ended
December 31, 2008 was $312.1 million, an increase of 30 percent
over 2007. GAAP net income was $2.8 million for the year ended
December 31, 2008 compared to GAAP net income of $12.9 million in
the same period last year. For the year ended December 31, 2008,
GAAP net income per basic share and diluted share was $0.09
compared to GAAP net income per basic share of $0.45 and GAAP net
income per diluted share of $0.43 for 2007. Non-GAAP adjusted net
income for the full year 2008, which excludes the amortization of
acquisition-related intangible assets, net of taxes, was $25.7
million, resulting in non-GAAP adjusted net income per diluted
share of $0.81 compared to non-GAAP adjusted net income of $26.2
million and non-GAAP adjusted net income per diluted share of $0.87
for 2007. "This was a good year for Blackboard resulting in strong
revenue and earnings performance and $80 million in operating cash
flows," said Michael Chasen, chief executive officer and president
of Blackboard. "Our strong financial results were driven by the
value our products and services provide to our global client base
for the management of their most mission-critical technologies. In
addition, with the introduction of Blackboard Connect we further
expanded our solutions offering to meet the growing needs of our
clients." Chasen continued, "Even with the challenging economy, our
business is well positioned and we believe in 2009 we can continue
to deliver strong revenue growth with expanding operating margins."
Highlights from the Fourth Quarter of 2008 -- Blackboard's new and
expanding client relationships in the quarter included: -- U.S.
Higher Education: Buffalo State University, Central Michigan
University, City Colleges of Chicago, Des Moines Area Community
College, Florida State University, Georgetown University, Georgia
Gwinnet College, Loyola Marymount University, Marshall University,
Michigan State University, Ohio State University, Santa Clara
University, South Carolina State, University of Alabama, University
of Central Missouri, University of Memphis, University of South
Carolina, University of Texas at Tyler, Vassar College and others.
-- International: Charles Darwin University, King Abdullah
University of Science and Technology, Korea University, Policia
Nacional de Colombia, Suffolk New College, Universidad Camilo Jose
Cela, Universidad de Los Andes, University of Birmingham, Utrecht
University and others. -- K-12: Cherry Creek School District (CO),
Cincinnati Public Schools (OH), Corvallis School District (OR),
Delaware Department of Education, Florida Virtual School, Jersey
City Schools (NJ), New Orleans Public Schools (LA), Riverside
Unified School District (CA), West Bend School District (IN) and
others. -- Blackboard's enterprise licenses (Blackboard Learning
System(TM) -- Enterprise, Blackboard Community System(TM),
Blackboard Transaction System(TM), Blackboard Content System(TM),
Blackboard Connect(TM) and Blackboard Outcomes System(TM)), totaled
6,817. -- Blackboard ended 2008 with 5,547 total clients. Change in
Definition of Non-GAAP Adjusted Net Income Beginning in the first
quarter of 2009, Blackboard will define "Non-GAAP Adjusted Net
Income" and "Non-GAAP Adjusted Net Income per Diluted Share," to
exclude the amortization of acquisition-related intangible assets,
stock-based compensation expense and certain defined non-cash
items, net of taxes. Under Blackboard's non-GAAP definition
utilized in 2008, these measures did not exclude stock-based
compensation expense. The Non-GAAP results presented in this press
release are calculated using the old definition, except for our
future guidance and the table below. For comparability with past
periods, Blackboard is providing Non-GAAP Adjusted Net Income and
Non-GAAP Adjusted Net Income per Diluted Share for each quarter of
2008 under the new definition in the table below. This table shows
a quantitative historical reconciliation of GAAP (Loss) Income
before Benefit (Provision) For Income Taxes to Non-GAAP Adjusted
Net Income and Non-GAAP Adjusted Net Income per Diluted Share under
both the old and new definition. 2008 ---- Q1 Q2 Q3 Q4 FY -- -- --
-- -- (unaudited and in thousands except per share amounts) GAAP
(Loss) income before benefit (provision) for income taxes $(5,098)
$2,950 $(260) $1,496 $(912) Add: Amortization of intangibles
resulting from acquisitions 8,679 9,729 9,729 9,729 37,866 Adjusted
provision for income taxes (1,623) (5,756) (1,492) (2,354) (11,225)
------ ------ ------ ------ ------- Non-GAAP adjusted net income
(old definition) $1,958 $6,923 $7,977 $8,871 $25,729 ====== ======
====== ====== ======= Non-GAAP adjusted net Income per diluted
share (old definition) $0.06 $0.22 $0.25 $0.28 $0.81 ===== =====
===== ===== ===== Non-GAAP effective tax rate (old definition)
45.3% 45.4% 15.8% 21.0% 30.4% Add: Stock-based compensation 3,682
3,797 3,632 4,016 15,127 Adjustment to provision for income taxes
(1,454) (1,500) (1,435) (1,586) (5,975) ------ ------ ------ ------
------ Non-GAAP adjusted net income (new definition) $4,186 $9,220
$10,174 $11,301 $34,881 ====== ====== ======= ======= =======
Non-GAAP adjusted net income per diluted share (new definition)
$0.13 $0.29 $0.32 $0.35 $1.10 ===== ===== ===== ===== =====
Non-GAAP effective tax rate (new definition) 42.4% 44.0% 22.3%
25.9% 33.0% Guidance for the First Quarter of 2009 -- Revenue of
$83.5 to $86.5 million; -- Stock-based compensation expense of
approximately $4.3 million; -- Amortization of acquired intangibles
of approximately $8.8 million; -- GAAP net loss of ($1,200,000) to
GAAP net income of $600,000, resulting in GAAP net loss per basic
share of ($0.04) to GAAP net income per diluted share of $0.02,
which is based on an estimated 31.4 million basic shares and 32.2
million diluted shares, respectively, and an estimated effective
tax rate of approximately 38 percent; -- Non-GAAP adjusted net
income (calculated on the new basis) of $6.7 to $8.6 million, which
excludes stock-based compensation expense and amortization of
acquisition-related intangible assets, net of taxes; and --
Non-GAAP adjusted net income per diluted share (calculated on the
new basis) of $0.21 to $0.27 based on an estimated 32.2 million
diluted shares and an estimated effective tax rate of approximately
38.5 percent. Guidance for the Full Year 2009 -- Revenue of $361.0
to $373.0 million; -- Stock-based compensation expense of
approximately $16.5 million; -- Amortization of acquired
intangibles of approximately $28 million; -- GAAP net income of
$16.1 to $23.5 million, resulting in GAAP net income per diluted
share of $0.49 to $0.72, which is based on an estimated 32.5
million diluted shares; and an estimated effective tax rate of
approximately 38 percent; -- Non-GAAP adjusted net income
(calculated on the new basis) of $43.7 to $51.1 million, which
excludes stock-based compensation expense and amortization of
acquisition-related intangible assets, net of taxes; -- Non-GAAP
adjusted net income per diluted share (calculated on the new basis)
of $1.34 to $1.57 based on an estimated 32.5 million diluted shares
and an estimated effective tax rate of approximately 38.5 percent;
-- Cash flow from operations of $80.0 to $95.0 million; and --
Capital expenditures of approximately 6 percent of total revenue.
During the first quarter of 2009, we expect to adopt FASB Staff
Position APB 14-1, "Accounting for Convertible Debt Instruments
That May be Settled in Cash Upon Conversion (Including Partial Cash
Settlement)" (APB 14-1) which would increase the interest expense
on our outstanding convertible debt. We estimate that the adoption
of APB 14-1 to result in increased interest expense of
approximately $1.5 million for the first quarter of 2009 and
approximately $6.0 million for the full year 2009. The increased
interest expense resulting from APB-14-A is a non-cash expense. The
current first quarter and full year 2009 guidance for GAAP net
income does not include the adoption of APB-14 and the adoption of
APB 14-1 would have no impact on our Non-GAAP Adjusted Net Income
which will exclude any non-cash interest expense on our convertible
debt. The first quarter and full year 2009 guidance for GAAP net
income does not include the effect of the adoption of FASB Staff
Position APB 14-1, "Accounting for Convertible Debt Instruments
That May be Settled in Cash Upon Conversion (Including Partial Cash
Settlement)" (APB 14-1) which would increase the interest expense
on our outstanding convertible debt. We estimate that the adoption
of APB 14-1 to result in increased interest expense of
approximately $1.5 million for the first quarter of 2009 and
approximately $6.0 million for the full year 2009. The increased
interest expense resulting from APB-14-A is a non-cash expense. The
adoption of APB 14-1 would have no impact on our Non-GAAP Adjusted
Net Income which will exclude any non-cash interest expense on our
convertible debt. Blackboard Conference Call Information: Domestic:
+1 (866) 831-6243 International: +1 (617) 213-8855 Confirmation
Code: 43311920 Blackboard will also broadcast its conference call
live over the Internet beginning at 4:30 p.m. on February 4, 2009,
and 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 from approximately 7:00 p.m. Eastern (4:00
p.m. Pacific) on February 4, 2009 until 11:00 p.m. Eastern (8:00
p.m. Pacific) on February 11, 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 96236089. BLACKBOARD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share
and per share amounts) Three Months Ended Year Ended December 31
December 31 ----------- ----------- 2007 2008 2007 2008 ---- ----
---- ---- (unaudited) (unaudited) (unaudited) Revenues: Product
$57,358 $77,440 $213,631 $283,258 Professional services 5,844 7,581
25,817 28,876 ----- ----- ------ ------ Total revenues 63,202
85,021 239,448 312,134 Operating expenses: Cost of product
revenues, excludes $2,977 and $4,572 for the three months ended
December 31, 2007 and 2008, respectively, and $11,654 and $17,803
for the years ended December 31, 2007 and 2008, respectively, in
amortization of acquired technology included in amortization of
intangibles resulting from acquisitions shown below (1) 11,833
21,640 47,444 75,237 Cost of professional services revenues (1)
4,602 4,477 16,941 19,555 Research and development (1) 7,436 10,389
28,278 40,580 Sales and marketing (1) 16,615 23,377 66,033 91,076
General and administrative (1) 10,425 12,826 38,667 50,757 Proceeds
from patent judgment - - - (3,313) Amortization of intangibles
resulting from acquisitions 5,734 9,729 22,122 37,866 ----- -----
------ ------ Total operating expenses 56,645 82,438 219,485
311,758 ------ ------ ------- ------- Income from operations 6,557
2,583 19,963 376 Other (expense) income: Interest expense (1,931)
(1,760) (5,766) (7,305) Interest income 2,341 406 5,673 1,893 Other
(expense) income (1,395) 267 575 4,124 ------ --- --- ----- Income
(loss) before (provision) benefit for income taxes 5,572 1,496
20,445 (912) (Provision) benefit for income taxes (1,369) 1,489
(7,580) 3,732 ------ ----- ------ ----- Net income $4,203 $2,985
$12,865 $2,820 ====== ====== ======= ====== Net income per common
share: Basic $0.14 $0.10 $0.45 $0.09 ===== ===== ===== =====
Diluted $0.14 $0.09 $0.43 $0.09 ===== ===== ===== ===== Weighted
average number of common shares: Basic 29,154,396 31,352,994
28,789,083 30,885,908 ========== ========== ========== ==========
Diluted 30,256,902 31,839,631 30,113,621 31,809,544 ==========
========== ========== ========== (1) Includes the following amounts
related to stock-based compensation: Cost of product revenues $203
$270 $672 $949 Cost of professional services revenues 160 81 631
321 Research and development 116 230 467 777 Sales and marketing
1,181 1,354 4,359 5,984 General and administrative 1,622 2,081
5,914 7,096 Reconciliation of GAAP Income (loss) before (provision)
benefit for Income taxes to Non-GAAP adjusted net income (2): GAAP
Income (loss) before (provision) benefit for income taxes $5,572
$1,496 $20,445 $(912) Add: Amortization of intangibles resulting
from acquisitions 5,734 9,729 22,122 37,866 Adjusted provision for
income taxes (3) (3,634) (2,354) (16,318) (11,225) ------ ------
------- ------- Non-GAAP adjusted net income (4) $7,672 $8,871
$26,249 $25,729 ====== ====== ======= ======= Non-GAAP adjusted net
income per common share - diluted (4) $0.25 $0.28 $0.87 $0.81 =====
===== ===== ===== (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 32.1% and 21.0% for the three
months ended December 31, 2007 and 2008, respectively, and
approximately 38.3% and 30.4% for the years ended December 31, 2007
and 2008, respectively. (4) Beginning in fiscal 2009, the Company
changed the definition it utilizes for non-GAAP adjusted net
income. However, for the 2007 and 2008 periods presented in the
reconciliation of income (loss) before (provision) benefit for
income taxes to non-GAAP adjusted net income, the old definition
for non-GAAP adjusted net income is being used which excludes the
amortization of intangibles resulting from acquisitions, net of
taxes. BLACKBOARD INC. CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31, 2007 2008 ---- ---- (unaudited) (in
thousands, except per share amounts) ASSETS Current assets: Cash
and cash equivalents $206,558 $141,746 Accounts receivable, net
52,846 92,529 Inventories 2,089 1,783 Prepaid expenses and other
current assets 5,255 8,922 Deferred tax asset, current portion
6,549 1,796 Deferred cost of revenues 6,877 7,271 ----- ----- Total
current assets 280,174 254,047 Deferred tax asset, noncurrent
portion 34,154 27,146 Investment in common stock warrant - 1,990
Restricted cash 4,015 4,249 Property and equipment, net 18,584
31,950 Goodwill and intangible assets, net 168,349 338,976 -------
------- Total assets $505,276 $658,358 ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $3,747 $2,579 Accrued expenses 24,182 27,879 Deferred rent,
current portion 160 345 Deferred revenues, current portion 126,600
179,238 ------- ------- Total current liabilities 154,689 210,041
Notes payable, net of debt discount 161,519 163,172 Deferred rent,
noncurrent portion 1,469 10,959 Deferred revenues, noncurrent
portion 2,925 5,554 Stockholders' equity: Common stock, $0.01 par
value 292 314 Additional paid-in capital 263,582 344,698
Accumulated deficit (79,200) (76,380) ------- ------- Total
stockholders' equity 184,674 268,632 ------- ------- Total
liabilities and stockholders' equity $505,276 $658,358 ========
======== BLACKBOARD INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year
Ended December 31 ----------- 2007 2008 ---- ---- (unaudited) (in
thousands) Cash flows from operating activities Net income $12,865
$2,820 Adjustments to reconcile net income to net cash provided by
operating activities: Deferred income tax benefit (2,830) (8,113)
Excess tax benefits from stock-based compensation (6,845) (2,107)
Amortization of debt discount 1,840 1,653 Depreciation and
amortization 10,681 15,703 Amortization of intangibles resulting
from acquisitions 22,122 37,866 Change in allowance for doubtful
accounts (2) 161 Noncash stock-based compensation 12,043 15,127
Gain on investment in common stock warrant - (3,980) Changes in
operating assets and liabilities: Accounts receivable (225)
(31,721) Inventories 288 306 Prepaid expenses and other current
assets (1,233) (2,594) Deferred cost of revenues 372 (394) Accounts
payable 952 (4,018) Accrued expenses 9,394 4,227 Deferred rent
1,101 9,675 Deferred revenues 8,834 45,224 ----- ------ Net cash
provided by operating activities 69,357 79,835 Cash flows from
investing activities Purchases of property and equipment (16,023)
(24,007) Proceeds from sale of investment in common stock warrant -
1,990 Payments for patent enforcement costs (4,186) (3,552)
Purchases of available-for-sale securities (94,250) - Sales of
available-for-sale securities 94,250 - Acquisitions, net of cash
acquired (27,664) (132,992) ------- -------- Net cash used in
investing activities (47,873) (158,561) Cash flows from financing
activities Proceeds from notes payable 160,456 - Payments on term
loan (24,400) - Payments on letters of credit (1,976) (530)
Releases of letters of credit - 1,184 Excess tax benefits from
stock-based compensation 6,845 2,107 Proceeds from exercise of
stock options 13,373 11,153 ------ ------ Net cash provided by
financing activities 154,298 13,914 ------- ------ Net increase
(decrease) in cash and cash equivalents 175,782 (64,812) Cash and
cash equivalents at beginning of year 30,776 206,558 ------ -------
Cash and cash equivalents at end of year $206,558 $141,746 ========
======== 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 first 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 November 6, 2008 with
the SEC. In addition, the forward-looking statements included in
this press release represent the Company's views as of February 4,
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 February 4, 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 amortization of acquired
intangibles and the associated tax impact, and beginning in 2009
will also exclude stock-based compensation 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 beginning in 2009 will also exclude stock-based compensation
expense. 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 6, 2008, as well as other
filings with the Securities and Exchange Commission when assessing
the Company's financial condition and results of operations.
DATASOURCE: Blackboard Inc. CONTACT: Michael J. Stanton, Senior
Vice President, Investor Relations of Blackboard Inc.,
+1-202-463-4860, ext. 2305 Web Site: http://www.blackboard.com/
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