- Company Announces Acquisition of ANGEL Learning, Inc. -
WASHINGTON, May 6 /PRNewswire-FirstCall/ -- Blackboard Inc.
(NASDAQ:BBBB) today announced financial results for the first
quarter ended March 31, 2009 and updated guidance for the second
quarter and the full year of 2009. Total revenue for the quarter
ended March 31, 2009 was $86.4 million, an increase of 26 percent
over the first quarter of 2008. Product revenues for the quarter
were $80.1 million, an increase of 27 percent over the first
quarter of 2008, while professional services revenues for the
quarter were $6.3 million, an increase of 18 percent over the first
quarter of 2008. GAAP net loss was $37,000, resulting in a net loss
per basic and diluted share of ($0.00) for the first quarter of
2009 compared to a net loss of $4.4 million or a net loss per basic
and diluted share of ($0.15) per share for the first quarter of
2008. Non-GAAP adjusted net income for the first quarter of 2009,
which excludes the amortization of acquisition-related intangible
assets, stock-based compensation, and non-cash interest expense,
all net of taxes, was $8.6 million, resulting in non-GAAP adjusted
net income per diluted share of $0.27 compared to non-GAAP adjusted
net income of $4.1 million or $0.13 per diluted share for the first
quarter of 2008. Our 2008 results have been adjusted to reflect the
adoption of FSP APB 14-1 related to our outstanding convertible
debt. "I am pleased with our strong financial results in the first
quarter which highlight the strength of our business model, our
high annual renewal rate and our ability to effectively manage our
expenses," said Michael Chasen, chief executive officer and
president for Blackboard. "While demand for our products and
services in some areas has been impacted by the challenging
economic environment the past few quarters, we continue to see
solid growth in many of our core markets and are managing our
business well to capture the significant market opportunity we see
in front of us." Highlights from the First Quarter of 2009 --
Blackboard's new and expanding client relationships in the quarter
included: -- U.S. Higher Education Market: Brunswick Community
College, Chapman University College, Claremont University, Cuyahoga
Community College, DeSales University, Mid-Plains College,
Montgomery College, Owens Community College, Santa Clara
University, Sierra College, University of Pittsburgh, University of
Southern Mississippi, Webster University and others. --
International Markets: Amersham and Wycombe College, Bournemouth
University, Instituto Nacional de Salud Publica, Interamerican
University of Puerto Rico, Middlesborough College, National College
of Puerto Rico, Queen Mary University of London, Rikkyo University,
Servicio Nacional de Aprendizaje (SENA), Universidad Autonoma de
Baja California, Universidad Catolica de Santiago de Guayaquil,
Universidade Catolic Portugesa, University of Manchester, Utrecht
University, York University and others. -- K-12 Market: Christa
McAuliffe Academy, Clear Creek Independent School District,
Cleveland County Schools, Florida State University Schools,
Midlothian Independent School District, Pennsylvania Cyber Charter
School, Phillips Academy Andover, Rochester Public Schools,
Sacramento City Unified School District, Shelby County School
District, Sweetwater Union High School District, Walnut Valley
Unified School District 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 6,836 as of March 31, 2009. -- The Company
announced the availability of Release 9.0 of the Blackboard
Learn(TM) platform (formerly the Blackboard Academic Suite(TM)).
The release introduces a range of powerful capabilities, from
social learning tools to Web 2.0 innovations, as well as integrated
components that enable institutions to achieve more meaningful
assessments of individuals, groups, programs and schools.
Blackboard to Acquire ANGEL Learning, Inc. In a separate
announcement today, Blackboard announced its planned acquisition of
ANGEL Learning, a leading provider of e-learning applications to
educational institutions. Under terms of the agreement, Blackboard
will acquire ANGEL Learning for approximately $95 million, net of
cash acquired and excluding transaction costs. The approximate
purchase price will be $80 million in cash and $15 million in
common stock. The transaction is expected to close in May 2009.
Blackboard expects this transaction to be accretive on a pro forma
non-GAAP basis for calendar year 2009, excluding the write-off of
deferred revenues in purchase accounting and non-recurring merger
and integration costs. Outlook for the Second Quarter and Full Year
of 2009 Blackboard's financial guidance for the second quarter and
full year 2009 reflects the inclusion of ANGEL Learning, based on
an anticipated acquisition close in May 2009. Blackboard expects
ANGEL Learning to contribute approximately $0.5 million and $7
million in GAAP revenue for the second quarter of 2009 and full
year 2009, respectively. As an adjustment to deferred revenue in
purchase accounting, Blackboard expects that there will be a
deferred revenue write-down of approximately $6.0 million over the
next 12 months. The deferred revenue write-down is expected to be
approximately $2.0 million in the second quarter of 2009 and
approximately $5.0 million for the full year 2009. Blackboard
currently expects the transaction to be dilutive for full year 2009
on a GAAP basis by approximately $0.28 per diluted share and on an
adjusted non-GAAP basis by approximately $0.14 per diluted share.
Second Quarter of 2009: -- Revenue of $87.5 to $90.5 million; --
Stock-based compensation expense of approximately $4.3 million; --
Amortization of acquired intangibles of approximately $8.0 million;
-- GAAP net loss of ($1.9) million to breakeven, -- GAAP net loss
per basic share of ($0.06) to GAAP net income per diluted share of
$0.00, which is based on an estimated 32.0 million basic shares and
32.5 million diluted shares, respectively, and an estimated
effective tax rate of approximately 38.5 percent; -- Non-GAAP
adjusted net income of $6.5 to $8.4 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 $0.20 to $0.26
based on an estimated 32.5 million diluted shares and an estimated
effective tax rate of approximately 38.5 percent. Full Year 2009:
-- Revenue of $365.5 to $374.5 million; -- Stock-based compensation
expense of approximately $16.6 million; -- Amortization of acquired
intangibles of approximately $35.5 million; -- GAAP net income of
$3.9 to $9.4 million, -- GAAP net income per diluted share of $0.12
to $0.29, which is based on an estimated 32.7 million diluted
shares; and an estimated effective tax rate of approximately 38.5
percent; -- Non-GAAP adjusted net income of $39.6 to $45.1 million,
which excludes the amortization of acquisition-related stock-based
compensation, and non-cash interest expense stock-based
compensation, and certain defined non-cash items, all net of taxes;
-- Non-GAAP adjusted net income per diluted share of $1.21 to $1.38
based on an estimated 32.7 million diluted shares and an estimated
effective tax rate of approximately 38.5 percent; -- Cash flow from
operations of $85.0 to $95.0 million; and -- Capital expenditures
of approximately 5 to 6 percent of total revenue. Conference Call
Blackboard will broadcast its first 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 May 6, 2009 until 11:00 p.m. Eastern
(8:00 p.m. Pacific) on May 13, 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 58094377. BLACKBOARD INC. UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share
and per share amounts) Three Months Ended March 31 -------- 2008
2009 ---- ---- Revenues: Product $63,109 $80,126 Professional
services 5,366 6,322 ----- ----- Total revenues 68,475 86,448
Operating expenses: Cost of product revenues, excludes $4,078 and
$3,638 for the three months ended March 31, 2008 and 2009,
respectively, in amortization of acquired technology included in
amortization of intangibles resulting from acquisitions shown below
(1) 15,970 21,444 Cost of professional services revenues (1) 4,948
4,767 Research and development (1) 9,733 10,827 Sales and marketing
(1) 20,859 23,941 General and administrative (1) 12,753 13,602
Amortization of intangibles resulting from acquisitions 8,679 8,585
----- ----- Total operating expenses 72,942 83,166 ------ ------
(Loss) income from operations (4,467) 3,282 Other (expense) income:
Interest expense (2) (2,981) (2,891) Interest income 890 107 Other
(expense) income 310 (558) --- ---- Loss before benefit for income
taxes (2) (6,248) (60) Benefit for income taxes 1,804 23 ----- --
Net loss (2) $(4,444) $(37) ======= ==== Net loss per common share:
(2) Basic $(0.15) $(0.00) ====== ====== Diluted $(0.15) $(0.00)
====== ====== Weighted average number of common shares: Basic
30,247,568 31,503,578 ========== ========== Diluted 30,247,568
31,503,578 ========== ========== (1) Includes the following amounts
related to stock-based compensation: Cost of product revenues $176
$270 Cost of professional services revenues 163 90 Research and
development 162 227 Sales and marketing 1,416 1,582 General and
administrative 1,763 1,818 (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
months ended March 31, 2008 have been adjusted to reflect
additional amortization of debt discount of $1,151. Interest
expense, Loss before benefit for income taxes, Net loss, and Net
loss per common share - Basic and Diluted have been adjusted
accordingly and were previously reported as $(1,830), $(5,097),
$(3,293), and $(0.11), respectively, for the three months ended
March 31, 2008. Reconciliation of GAAP Net loss before benefit for
income taxes to Non-GAAP adjusted net income (3): GAAP Net loss
before benefit for income taxes $(6,248) $(60) Add: Amortization of
intangibles resulting from acquisitions 8,679 8,585 Add:
Stock-based compensation 3,680 3,987 Add: Non-cash interest expense
1,595 1,555 Adjusted provision for income taxes (4) (3,520) (5,462)
------ ------ Non-GAAP adjusted net income (5) $4,186 $8,605 ======
====== Non-GAAP adjusted net income per common share - diluted (5)
$0.13 $0.27 ===== ===== Weighted average number of diluted common
shares 31,045,797 32,019,009 ========== ========== (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 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 45.7% and 38.8%
for the three months ended March 31, 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 loss before 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, and non-cash interest expense, all net of
taxes. BLACKBOARD INC. CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31, 2008 2009 ---- ---- (unaudited) (in
thousands, except per share amounts) ASSETS Current assets: Cash
and cash equivalents $141,746 $136,164 Short-term investments -
6,586 Accounts receivable, net 92,529 56,455 Inventories 1,783
1,961 Prepaid expenses and other current assets (6) 8,361 11,382
Deferred tax asset, current portion 1,796 2,055 Deferred cost of
revenues 7,126 5,927 ----- ----- Total current assets 253,341
220,530 Deferred tax asset, noncurrent portion (6) 18,897 20,494
Investment in common stock warrant 1,990 1,990 Restricted cash
4,249 4,169 Property and equipment, net 31,950 32,678 Other assets
549 1,241 Goodwill and intangible assets, net 338,976 328,689
------- ------- Total assets $649,952 $609,791 ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $2,579 $2,652 Accrued expenses 27,879 19,201 Deferred rent,
current portion 345 88 Deferred revenues, current portion 179,238
139,868 ------- ------- Total current liabilities 210,041 161,809
Notes payable, net of debt discount (6) 149,923 151,478 Deferred
rent, noncurrent portion 10,959 11,874 Deferred revenues,
noncurrent portion 5,554 5,340 Stockholders' equity: Common stock,
$0.01 par value 314 316 Additional paid-in capital (6) 356,683
362,533 Accumulated deficit (6) (83,522) (83,559) ------- -------
Total stockholders' equity 273,475 279,290 ------- ------- Total
liabilities and stockholders' equity $649,952 $609,791 ========
======== (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, 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 Three Months
Ended March 31 -------- 2008 2009 ---- ---- (in thousands) Cash
flows from operating activities Net loss (7) $(4,444) $(37)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: Deferred income tax benefit (1,671) (1,856)
Excess tax benefits from stock-based compensation (563) (182)
Amortization of debt discount (7) 1,595 1,555 Depreciation and
amortization 3,316 4,719 Amortization of intangibles resulting from
acquisitions 8,679 8,585 Change in allowance for doubtful accounts
30 289 Stock-based compensation 3,680 3,987 Changes in operating
assets and liabilities: Accounts receivable 7,842 35,786
Inventories 234 (178) Prepaid expenses and other current assets (7)
(1,018) (3,858) Deferred cost of revenues 957 1,344 Accounts
payable 457 73 Accrued expenses (4,469) (6,914) Deferred rent 1,469
658 Deferred revenues (22,149) (39,585) ------- ------- Net cash
(used in) provided by operating activities (6,055) 4,386 Cash flows
from investing activities Purchases of property and equipment
(7,944) (5,287) Payments for patent enforcement costs (635) (41)
Purchase of available-for-sale investments - (6,586) Acquisitions,
net of cash acquired (131,923) - -------- ------ Net cash used in
investing activities (140,502) (11,914) Cash flows from financing
activities Release of letter of credit - 80 Excess tax benefits
from stock-based compensation 563 182 Proceeds from exercise of
stock options 1,802 1,684 ----- ----- Net cash provided by
financing activities 2,365 1,946 ----- ----- Net decrease in cash
and cash equivalents (144,192) (5,582) Cash and cash equivalents at
beginning of year 206,558 141,746 ------- ------- Cash and cash
equivalents at end of year $62,366 $136,164 ======= ======== (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 $(3,293), $459, and $(1,033),
respectively, for the three months ended March 31, 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 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-K filed on February 26, 2009 with
the SEC. In addition, the forward-looking statements included in
this press release represent the Company's views as of May 6, 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 May 6, 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 of acquisition-related
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 and non-cash interest 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-K dated
February 26, 2009, 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: For Financial Media and Investors, Michael J. Stanton,
Senior Vice President, Investor Relations, +1-202-463-4860 ext.
2305, or For Education & General Media, Matthew Maurer,
Director, Public Relations, +1-202-463-4860 ext. 2637, , both of
Blackboard Inc. Web Site: http://www.blackboard.com/
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