- Revenue Increases 18 Percent Year-Over-Year - - Company Raises
Revenue, Non-GAAP Earnings and Cash Flow Guidance - WASHINGTON,
Nov. 3 /PRNewswire-FirstCall/ -- Blackboard Inc. (NASDAQ: BBBB)
today announced financial results for the third quarter ended
September 30, 2009 and updated guidance for the fourth quarter and
the full year of 2009. Total revenue for the quarter ended
September 30, 2009 was $98.4 million, an increase of 18 percent
over the third quarter of 2008. Product revenues for the quarter
were $87.9 million, an increase of 18 percent over the third
quarter of 2008, while professional services revenues for the
quarter were $10.5 million, an increase of 20 percent over the
third quarter of 2008. The increase in revenue was driven by strong
growth in Blackboard's professional services and managed hosting
offerings. GAAP net income was $4.3 million, resulting in net
income per diluted share of $0.13 for the third quarter of 2009
compared to net income of $885,000 and net income per diluted share
of $0.03 for the third quarter of 2008. Non-GAAP adjusted net
income for the third 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
$13.3 million, resulting in non-GAAP adjusted net income per
diluted share of $0.40 compared to non-GAAP adjusted net income of
$10.2 million and non-GAAP adjusted net income per diluted share of
$0.32 for the third quarter of 2008. Additional Financial
Highlights from the Third Quarter of 2009 -- Total cash flow from
operations was $76.0 million for the third quarter of 2009,
representing a 26% increase compared to the third quarter last
year. -- Cash and cash equivalents were $132.0 million as of
September 30, 2009. "We are pleased with our financial results in
the third quarter which exceeded our prior guidance. Cash flow from
operations during the quarter was a record for the Company, driven
by our strong renewal rates during our peak renewal quarter," said
Michael Chasen, CEO and President of Blackboard Inc. "We
experienced solid demand for our products and services and
continued to experience a growing sales pipeline. We were
particularly pleased with the adoption of some of our newer
products like Blackboard Mobile(TM), which strengthens our overall
positioning in the market and fills a vital need for our clients
seeking better ways to serve constituents." Highlights from the
Third Quarter of 2009 -- A few of Blackboard's new and expanded
client relationships in the quarter included: -- U.S. Higher
Education: Alamance Community College, Arizona State University,
Baylor University, Binghamton University, Carlow University, Des
Moines Area Community College, Florida A&M University,
Grambling State University, Hinds Community College, Louisiana
Community and Technical College System, Louisiana State University,
North Carolina Central University, South Orange County Community
College, Texas A&M University-San Antonio, University of
Southern Mississippi, University of Washington and others. --
International: Delft University of Technology, Emirates College,
Hong Kong Institute of Education, King Faisal University, King Saud
University, Manchester University, Radboud University, Regent's
College in London, University of Bristol, University of Central
Lancashire and others. -- K-12: Irving ISD, KC Distance Learning,
Mead School District, Newark Public Schools, Omaha Public Schools,
Pomona Unified School District, Queen Anne's County Public Schools,
Santa Monica-Malibu Unified School District, Spokane Public
Schools, Tangipahoa Parish School Board and others. -- Professional
Education (ProEd): Air University, Capella University, Central
Intelligence Agency, Defense Information School, Defense Language
Institute, Grand Canyon University, Joint Special Operations
University, National Academy of Medical Coding Specialists,
National Intelligence University and others. -- Blackboard
announced the launch of the Blackboard Mobile platform. Blackboard
Mobile allows education institutions to deliver a rich set of
campus life services and content to mobile devices, uniquely
branded for each institution, to better connect current students,
parents, faculty, prospective students and alumni to the campus
experience. Outlook for the Fourth Quarter and Full Year of 2009
Fourth Quarter of 2009: -- Revenue of $96.7 to $99.7 million; --
Stock-based compensation expense of approximately $4.0 million; --
Amortization of acquired intangibles of approximately $9.3 million;
-- GAAP net income of $4.2 million to $6.4 million; -- GAAP net
income per diluted share of $0.12 to $0.19, which is based on an
estimated 33.7 million diluted shares, and an estimated effective
tax rate of approximately 28 percent; -- Non-GAAP adjusted net
income of $13.3 to $15.5 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 $0.40 to $0.46 based on an
estimated 33.7 million diluted shares and an estimated effective
tax rate of approximately 35 percent. Full Year 2009: -- Revenue of
$373.6 to $376.6 million; -- Stock-based compensation expense of
approximately $16.0 million; -- Amortization of acquired
intangibles of approximately $35.0 million; -- GAAP net income of
$4.4 to $6.5 million; -- GAAP net income per diluted share of $0.13
to $0.20, which is based on an estimated 32.5 million diluted
shares and an estimated effective tax rate of approximately 28
percent; -- Non-GAAP adjusted net income of $44.1 to $46.3 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 $1.34 to $1.41
based on an estimated 32.8 million diluted shares and an estimated
effective tax rate of approximately 38 percent; and -- Cash flow
from operations of $95.0 to $105.0 million. Conference Call
Blackboard will broadcast its third 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 November
3, 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
37009592. BLACKBOARD INC. UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except share and per share amounts) Three
Months Ended Nine Months Ended September 30 September 30
------------ ------------ 2008 2009 2008 2009 ---- ---- ---- ----
Revenues: Product $74,332 $87,862 $205,818 $251,369 Professional
services 8,758 10,546 21,295 25,597 ----- ------ ------ ------
Total revenues 83,090 98,408 227,113 276,966 Operating expenses:
Cost of product revenues, excludes $4,572 and $2,480 for the three
months ended September 30, 2008 and 2009, respectively, and $13,232
and $8,152 for the nine months ended September 30, 2008 and 2009,
respectively, in amortization of acquired technology included in
amortization of intangibles resulting from acquisitions shown below
(1) 19,626 23,849 53,597 67,055 Cost of professional services
revenues (1) 4,994 5,550 15,078 15,020 Research and development (1)
10,514 11,428 30,191 33,848 Sales and marketing (1) 24,079 24,670
67,699 74,008 General and administrative (1) 12,716 14,636 37,931
42,476 Patent related (proceeds) impairment and other costs - -
(3,313) 10,984 Amortization of intangibles resulting from
acquisitions 9,729 9,282 28,137 25,728 ----- ----- ------ ------
Total operating expenses 81,658 89,415 229,320 269,119 ------
------ ------- ------- Income (Loss) from operations 1,432 8,993
(2,207) 7,847 Other (expense) income: Interest expense (2) (3,004)
(3,015) (9,073) (8,877) Interest income 339 36 1,487 202 Other
income (233) 300 3,857 1,103 ---- --- ----- ----- (Loss) Income
before benefit (provision) for income taxes (2) (1,466) 6,314
(5,936) 275 Benefit (Provision) for income taxes 2,351 (2,007)
2,243 (77) ----- ------ ----- --- Net income (loss) (2) $885 $4,307
$(3,693) $198 ==== ====== ======= ==== Net income (loss) per common
share: (2) Basic $0.03 $0.13 $(0.12) $0.01 ===== ===== ====== =====
Diluted $0.03 $0.13 $(0.12) $0.01 ===== ===== ====== ===== Weighted
average number of common shares: Basic 31,184,215 32,073,491
30,754,997 31,682,212 ========== ========== ========== ==========
Diluted 32,203,249 33,045,337 30,754,997 32,466,179 ==========
========== ========== ========== (1) Includes the following amounts
related to stock- based compensation: Cost of product revenues $244
$347 $679 $923 Cost of professional services revenues 8 138 240 398
Research and development 195 284 547 768 Sales and marketing 1,549
1,501 4,630 4,625 General and administrative 1,636 1,775 5,015
5,270 (2) Blackboard adopted ASC 470-20 (Prior authoritative
literature: FASB Staff Position No. APB 14-1, "Accounting for
Convertible Debt Instruments that May be Settled in Cash Upon
Conversion") effective January 1, 2009, which required restatement
of prior periods, as applicable. The three and nine months ended
September 30, 2008 have been adjusted to reflect additional
amortization of debt discount of $1,206 and $3,529, respectively.
Interest expense, Income (Loss) before benefit (provision) for
income taxes, Net income (loss), and Net income (loss) per common
share - Basic and Diluted have been adjusted accordingly and were
previously reported as $(1,798), $(260), $2,091, $0.07 and $0.06,
respectively, for the three months ended September 30, 2008.
Interest expense, Income (Loss) before benefit (provision) for
income taxes, Net income (loss), and Net income (loss) per common
share - Basic and Diluted have been adjusted accordingly and were
previously reported as $(5,545), $(2,408), $(165), $(0.01) and
$(0.01), respectively, for the nine months ended September 30,
2008. Reconciliation of GAAP Net (loss) income before benefit
(provision) for income taxes to Non-GAAP adjusted net income (3):
GAAP Net (loss) income before benefit (provision) for income taxes
$(1,466) $6,314 $(5,936) $275 Add: Non-cash patent related
impairment - - - 7,447 Add: Amortization of intangibles resulting
from acquisitions 9,729 9,282 28,137 25,728 Add: Stock-based
compensation 3,632 4,045 11,111 11,984 Add: Non-cash interest
expense 1,595 1,571 4,777 4,689 Adjusted provision for income taxes
(4) (3,316) (7,892) (14,509) (19,463) ------ ------ ------- -------
Non-GAAP adjusted net income (5) $10,174 $13,320 $23,580 $30,660
======= ======= ======= ======= Non-GAAP adjusted net income per
common share - diluted (5) $0.32 $0.40 $0.74 $0.94 ===== =====
===== ===== Weighted average number of diluted common shares
32,203,249 33,045,337 31,778,833 32,466,179 ========== ==========
========== ========== (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 24.6% and 37.2% for the three months ended
September 30, 2008 and 2009, respectively, and approximately 38.1%
and 38.8% for the nine months ended September 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 (loss)
income before benefit (provision) 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, September 30, 2008 2009 ---- ---- (in
thousands, except per share amounts) ASSETS Current assets: Cash
and cash equivalents $141,746 $132,049 Accounts receivable, net
92,529 93,018 Inventories 1,783 2,140 Prepaid expenses and other
current assets (6) 8,361 12,235 Deferred tax asset, current portion
1,796 5,255 Deferred cost of revenues 7,126 7,609 ----- ----- Total
current assets 253,341 252,306 Deferred tax asset, noncurrent
portion (6) 18,897 9,067 Investment in common stock warrant 1,990
3,124 Restricted cash 4,249 4,139 Property and equipment, net
31,950 36,286 Other assets 549 936 Goodwill and intangible assets,
net 338,976 409,873 ------- ------- Total assets $649,952 $715,731
======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $2,579 $5,524 Accrued expenses 27,879
35,880 Deferred rent, current portion 345 975 Deferred revenues,
current portion 179,238 200,472 ------- ------- Total current
liabilities 210,041 242,851 Notes payable, net of debt discount (6)
149,923 154,612 Deferred rent, noncurrent portion 10,959 11,674
Deferred revenues, noncurrent portion 5,554 6,536 Stockholders'
equity: Common stock, $0.01 par value 314 322 Additional paid-in
capital (6) 356,683 383,060 Accumulated deficit (6) (83,522)
(83,324) ------- ------- Total stockholders' equity 273,475 300,058
------- ------- Total liabilities and stockholders' equity $649,952
$715,731 ======== ======== (6) As noted in footnote (2) above, ASC
470-20 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 Nine Months Ended September 30
------------ 2008 2009 ---- ---- (in thousands) Cash flows from
operating activities Net (loss) income (7) $(3,693) $198
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: Deferred income tax benefit (6,094) (2,455)
Excess tax benefits from stock-based compensation (1,903) (763)
Amortization of debt discount (7) 4,777 4,689 Depreciation and
amortization 11,642 14,045 Amortization of intangibles resulting
from acquisitions 28,137 25,728 Patent related impairment charge -
7,447 Change in allowance for doubtful accounts 245 1,233
Stock-based compensation 11,111 11,984 Gain on investment in common
stock warrant (3,980) (1,136) Changes in operating assets and
liabilities: Accounts receivable (41,818) 987 Inventories 59 (357)
Prepaid expenses and other current assets (7) (2,545) (3,319)
Deferred cost of revenues (6) (483) Accounts payable (2,027) 2,885
Accrued expenses 1,006 8,780 Deferred rent 8,575 1,345 Deferred
revenues 51,932 19,002 ------ ------ Net cash provided by operating
activities 55,418 89,810 Cash flows from investing activities
Purchases of property and equipment (22,297) (15,919) Payments for
patent enforcement costs (3,141) (414) Purchase of
available-for-sale investments - (6,586) Redemptions of
available-for-sale investments - 6,586 Proceeds from common stock
warrant 1,990 - Acquisitions, net of cash acquired (132,992)
(91,784) -------- ------- Net cash used in investing activities
(156,440) (108,117) Cash flows from financing activities Payments
on letters of credit (127) - Release of letters of credit 777 110
Excess tax benefits from stock-based compensation 1,903 763
Proceeds from exercise of stock options 10,657 7,737 ------ -----
Net cash provided by financing activities 13,210 8,610 ------ -----
Net decrease in cash and cash equivalents (87,812) (9,697) Cash and
cash equivalents at beginning of period 206,558 141,746 -------
------- Cash and cash equivalents at end of period $118,746
$132,049 ======== ======== (7) As noted in footnote (2) above, ASC
470-20 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 $(165), $1,286, and $(2,582), respectively, for the
nine months ended September 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. 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 August 6, 2009 with the SEC. In
addition, the forward-looking statements included in this press
release represent the Company's views as of November 3, 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
November 3, 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 August 6,
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, Blackboard Inc., +1-202-463-4860
ext. 2305, Staci Strauss Mortenson, Senior Vice President, ICR,
+1-203-682-8273; For Education & General Media: Matthew Maurer,
Director, Public Relations, Blackboard Inc., +1-202-463-4860 ext.
2637, Web Site: http://www.blackboard.com/
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