Blackboard Inc. Reports Second Quarter Revenue of $107.7 Million

WASHINGTON, Aug. 9 /PRNewswire-FirstCall/ -- Blackboard Inc. (Nasdaq: BBBB) today announced financial results for the second quarter ended June 30, 2010 and updated guidance for the third quarter and the full year of 2010.  

Total revenue for the quarter ended June 30, 2010 was $107.7 million, an increase of 17 percent over the second quarter of 2009. Product revenues for the quarter were $97.5 million, an increase of 17 percent over the second quarter of 2009, while professional services revenues for the quarter were $10.3 million, an increase of 17 percent over the second quarter of 2009.  

GAAP net income was $4.4 million, resulting in net income per basic and diluted share of $0.13 per share for the second quarter of 2010 compared to a net loss of $4.1 million or a net loss per basic and diluted share of ($0.13) per share for the second quarter of 2009. Non-GAAP adjusted net income for the second quarter of 2010, which excludes the amortization of acquisition-related intangible assets, stock-based compensation, and non-cash interest expense, all net of taxes, was $14.0 million, resulting in non-GAAP adjusted net income per diluted share of $0.40 compared to non-GAAP adjusted net income of $8.7 million or $0.27 per diluted share for the second quarter of 2009.

"I am pleased that once again we have delivered strong financial results including solid revenue and earnings growth," said Michael Chasen, chief executive officer and president of Blackboard. "With our range of products and services, including new technologies from the acquisitions of Elluminate and Wimba, we are well positioned to continue to meet the expanding needs of the global education market."

Highlights from the Second Quarter of 2010

• A few of Blackboard's new and expanded client relationships in the quarter included:
  • U.S. Higher Education: Anne Arundel Community College, Cecil Community College, Drake University, Duquesne University, Fairfield University, Florida Atlantic University, George Mason University, Greenville Technical College, Hawaii Pacific University, Liberty University, Lorain County Community College, Loyola University Chicago, Northwestern University, Ohio Board of Regents, University of Kentucky, University of North Texas, University of Pittsburgh, Xavier University and others.
  • International: BPP Group, Cardiff University, Henley College Coventry, INHOLLAND University, Insper Instituto de Ensino e Pesquisa, Linnaeus University, London South Bank University, Middlesbrough College, Middlesex University, Newcastle College, Northumberland College, Sheffield Hallam University, St. Bede's School, UCSYD, Universidad Javeriana, University of Leicester, University of Manchester, University of Sheffield and others.
  • K-12: Cabot School District, Cobb County School District, Corona-Norco Unified School District, eTech Ohio, Fairfax County Public Schools, Florida Virtual School, Franklin-McKinley School District, Leyden School District, Orleans Parrish Schools, Ottawa Catholic School Board, Polk County Public Schools, Poudre Valley School District, Roanoke County Public Schools, Southern Westchester BOCES, Strathcona-Tweedsmuir School, Talbot County School District, Thomasville City School, Volusia County Public Schools and others.
  • Professional Education (ProEd): American Technical Publishers, American University of Antigua College of Medicine, Berkeley Educational Services, Capitol College, College America Services, Grand Canyon University, LIM College, National University, South Carolina Educational Television, St. Louis College of Heath Careers, Uniformed Services University of the Health Sciences and others.

• Blackboard launched Blackboard Mobile™ Learn for Android™, BlackBerry®, iPad® and iPhone® OS powered devices that give millions of students instant access to their course information directly from their smartphones. This new application recreates the course experience of Blackboard Learn™, the leading online teaching and learning platform, and lets students check grades and assignments, add discussion board comments and blog posts, email instructors and classmates and much more.
• Blackboard announced a major update for its flagship software with the launch of Blackboard Learn™, Release 9.1, which integrates a range of social learning tools and drives student engagement. The release also introduces important new features for K-12 teachers and learners, including lesson planning and standards alignment.
• Blackboard earned one of the software industry's top honors this quarter when its online learning platform was named Best Course Management Solution in the Software & Information Industry Association's (SIIA) 2010 CODiE™ Awards.
• The Ohio Board of Regents selected Blackboard to help develop the plan for establishing a new, statewide digital learning clearinghouse to help increase the number of Ohio students that attend and graduate from college and, in turn, strengthen the state's overall workforce and economy.

Blackboard Completes Acquisitions of Elluminate, Inc. and Wimba, Inc.

Blackboard announced today that it has closed the acquisitions of Elluminate, Inc. and Wimba, Inc., two of the leading providers of synchronous learning and collaboration technology to the education markets, for a total of approximately $120 million in cash, excluding transaction costs.

These leading teams and solutions together will form Blackboard Collaborate™, the newest standalone platform in the Company's family of education solutions. Blackboard, combined with the teams from Elluminate and Wimba, will pursue greater innovation to meet growing needs in the area of synchronous learning and collaboration, including continued support for integrations with open source applications and other commercial learning management systems (LMS).

Outlook for the Third Quarter and Full Year of 2010

Blackboard's current financial guidance for the third quarter and full year of 2010 is inclusive of the acquisitions of Elluminate, Inc. and Wimba, Inc.

Third Quarter of 2010:

• Revenue of $118.6 million to $122.6 million;
• Amortization of acquired intangibles of approximately $9.8 million;
• Stock-based compensation expense of approximately $5.1 million;
• GAAP net income of $4.1 million to $6.5 million,
• GAAP net income per diluted share of $0.12 to $0.19, which is based on an estimated 35.0 million diluted shares and an estimated effective tax rate of approximately 32.0 percent;
• Non-GAAP adjusted net income of $14.0 to $16.4 million, which excludes the amortization of acquisition-related intangible assets, stock-based compensation expense, and non-cash interest expense, all net of taxes; and
• Non-GAAP adjusted net income per diluted share of $0.40 to $0.47 based on an estimated 35.0 million diluted shares and an estimated effective tax rate of approximately 37.5 percent.

Full Year 2010:

• Revenue of $441.4 to $449.4 million;
• Amortization of acquired intangibles of approximately $38.4 million;
• Stock-based compensation expense of approximately $20.6 million;
• GAAP net income of $12.5 to $17.2 million,
• GAAP net income per diluted share of $0.36 to $0.49, which is based on an estimated 34.9 million diluted shares and an estimated effective tax rate of approximately 29.0 percent;
• Non-GAAP adjusted net income of $51.8 to $56.6 million, which excludes the amortization of acquisition-related intangible assets, stock-based compensation expense, and non-cash interest expense, all net of taxes;
• Non-GAAP adjusted net income per diluted share of $1.48 to $1.62  based on an estimated 34.9 million diluted shares and an estimated effective tax rate of approximately 37.0 percent;
• Free cash flow from operations (cash flow from operations less purchases of property and equipment) of $75.0 to $85.0 million.

Blackboard Announces $175 Million Credit Facility

Blackboard announced today it has established a $175 million credit facility with a group of lenders. The Company has not drawn on the facility.  Proceeds from the facility will be used for general corporate purposes which may include share purchases, repayment of other debt and acquisitions. Additional details about the facility will be included on a Form 8-K to be filed with the Securities and Exchange Commission.  The Credit Agreement provides for the following terms:

• Revolving credit facility with $175 million in commitments from a group of nine lenders;
• Expansion feature permitting additional revolving or term loan commitments of up to $50 million;
• 5-year facility with a maturity date of August 4, 2015.

JPMorgan Securities Inc. acted as the Sole Bookrunner and Sole Lead Arranger of the oversubscribed financing. JPMorgan Chase Bank, N.A. is acting as Administrative Agent, Citibank, NA and Credit Suisse AG acted as Co-Syndication Agents and PNC Bank, N.A. and Wells Fargo Bank, N.A. acted as Co-Documentation Agents for the bank syndication that includes: Silicon Valley Bank, SunTrust Bank, M&T Bank and Bank of America, N.A. as lenders.

Conference Call

Blackboard will broadcast its second 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 August 9, 2010. 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 75542315.

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.™

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 third quarter of 2010 and the full year 2010 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 August 9, 2010 with the SEC. In addition, the forward-looking statements included in this press release represent the Company's views as of August 9, 2010. 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 August 9, 2010.

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 2010 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 9, 2010, as well as other filings with the Securities and Exchange Commission when assessing the Company's financial condition and results of operations.

SOURCE Blackboard Inc.