Blackboard Inc. Reports First Quarter Results
Revenue of $37.7 Million;
Company Raises Financial Guidance for 2006
WASHINGTON, May 8 /PRNewswire-FirstCall/ -- Blackboard Inc. (Nasdaq: BBBB)
today announced financial results for the first quarter ended March 31, 2006
and updated guidance for the second quarter and the full year of 2006.
Blackboard's first quarter revenue was $37.7 million. Product revenue was
$33.2 million, an increase of 20 percent over the $27.7 million of product
revenue last year. Professional services revenue for the quarter was $4.5
million, which represents an increase of 39 percent over the first quarter of
2005. Net income in the first quarter was $148,000, resulting in net income of
$0.01 per diluted share. Cash net income, a non-GAAP financial measure, which
excludes the amortization of intangibles, stock-based compensation expense and
the associated tax impact, was $2.2 million resulting in cash net income per
diluted share of $0.07.
The financial results for the first quarter reflect the inclusion of WebCT
since February 28, 2006. Due to purchase accounting adjustments, Blackboard's
2006 revenue related to WebCT deferred revenue at the date of the merger will
be lower than what WebCT would have recognized as an independent company.
When former WebCT clients renew their license agreements, Blackboard will
recognize revenue for the full value of these agreements over the term of the
renewal, which is generally one year. Blackboard's 2006 results will also be
negatively impacted by merger and integration related expenses from the WebCT
acquisition.
"I am very pleased with the continuing strength of our business
performance and financial results in the first quarter of 2006," said Michael
Chasen CEO of Blackboard Inc. "Demand for Blackboard products and
professional services were driven by a combination of existing and new client
subscribers."
Merger with WebCT Complete, Outlook Positive
Commenting on the integration of WebCT, Inc., Peter Repetti, Blackboard's
CFO, stated, "Our most significant accomplishment in the quarter was the
successful completion of our merger with WebCT. The integration to date is
proceeding smoothly, and we believe that we are effectively building on the
unique strengths of the combined organization. Based on our positive
momentum, we have raised our quarterly and full-year financial guidance for
2006."
Quarterly Highlights
* A few of Blackboard's new and expanded client relationships in the
quarter included:
- U.S. Higher Education: Albany College of Pharmacy, Campbell
University, College of the Canyons, Florida Atlantic University, Fox
Valley Technical College, Loyola University New Orleans, Mills
College, Oberlin College, Oklahoma Christian University, Rowan-
Cabarrus Community College, University of Michigan - Flint, Waukesha
County Technical College and others.
- International: Canterbury Christ Church University, College of the
Bahamas, Heriot-Watt University, Kings College, New College Durham,
Niigata University, Shizuoka University, Spiru Haret University, and
others.
- K-12: Branson School Online, Hudson County Schools of Technology, Kane
County Regional Office of Education, Lubbock Independent School
District, and others.
* On February 28, 2006, Blackboard completed its merger with WebCT, Inc.
* The Company hosted BbWorld(TM) 2006, Blackboard's 8th Annual Users
Conference, which attracted more than 1,800 client and partner
attendees.
* In March, the Company announced the launch of the Blackboard Beyond
Initiative. The Blackboard Beyond Initiative calls for the creation of
a series of Web properties that connect the institutions, faculty and
students who use Blackboard worldwide across education segments and
disciplines.
Financial Guidance for the Second Quarter and Full Year 2006
Second Quarter of 2006:
* Revenue of $40.5 to $41.5 million;
* Stock-based compensation expense of $2.5 million;
* Amortization of acquired intangibles of $5.4 million;
* Net loss of ($8.7) to ($8.3) million, resulting in net loss per diluted
share of ($0.30) to ($0.28), which is based on an estimated 29.3 million
diluted shares and an effective tax rate of 32 percent; and
* Cash net loss, which is a non-GAAP financial measure, of ($3.0) to
($2.6) million, which excludes amortization of intangibles, stock-based
compensation expense, and the associated tax impact, resulting in cash
net loss per diluted share of ($0.10) to ($0.09) based on an estimated
29.3 million diluted shares and an effective tax rate of 39.5 percent.
Full year 2006:
* Revenue of $169.7 to $172.7 million;
* Stock-based compensation expense of $9.6 million;
* Amortization of acquired intangibles of $18 million;
* Net loss of ($15.9) to ($14.7) million, resulting in net loss per
diluted share of ($0.54) to ($0.50), which is based on an estimated
29.6 million diluted shares and an effective tax rate of 33.0 percent;
and
* Cash net income, which is a non-GAAP financial measure, of $2.5 to $3.7
million, which excludes amortization of intangibles, stock-based
compensation expense, and the associated tax impact, resulting in cash
net income per diluted share of $0.08 to $0.13 based on an estimated
29.6 million diluted shares and an effective tax rate of 39.5 percent.
BLACKBOARD INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
-----------------------------
2005 2006
----------- -----------
(in thousands, except share and
per share amounts)
Revenues:
Product $27,687 $33,174
Professional services 3,255 4,534
----------- -----------
Total revenues 30,942 37,708
Operating expenses:
Cost of product revenues, excludes
amortization of acquired technology
included in amortization of intangibles
resulting from acquisitions shown below
and includes $35 in stock based
compensation for 2006 7,216 7,966
Cost of professional services revenues,
includes $118 in stock based compensation
for 2006 2,214 3,391
Research and development, includes $122 in
stock based compensation for 2006 3,198 4,884
Sales and marketing, includes $407 in stock
based compensation for 2006 8,484 12,149
General and administrative, includes $18
and $817 in stock based compensation for
2005 and 2006, respectively 4,623 7,600
Amortization of intangibles resulting from
acquisitions 68 1,837
----------- -----------
Total operating expenses 25,803 37,827
----------- -----------
Income from operations 5,139 (119)
Other income (expense):
Interest expense (18) (578)
Interest income 483 1,241
Other expense - (326)
----------- -----------
Income before provision for income taxes 5,604 218
Provision for income taxes (194) (70)
----------- -----------
Net income $5,410 $148
Net income per common share
Basic $0.21 $0.01
=========== ===========
Diluted $0.20 $0.01
=========== ===========
Weighted average number of common shares:
Basic 26,076,137 27,577,200
=========== ===========
Diluted 27,657,202 28,757,423
=========== ===========
Reconciliation of income before provision
for income taxes to cash net income (1):
Income before provision for income taxes $5,604 $218
Add: Amortization of intangibles resulting
from acquisitions 68 1,837
Add: Stock-based compensation 18 1,499
Proforma provision for income taxes (2) (214) (1,404)
----------- -----------
Cash net income $5,476 $2,150
=========== ===========
Cash net income per common share - diluted $0.20 $0.07
=========== ===========
Proforma weighted average number of common
shares - diluted 27,657,202 28,757,423
=========== ===========
(1) Cash net income is not a generally accepted accounting principle or
GAAP measure. However, management believes that, based on feedback
from investors, analysts and other users of the Company's financial
information, cash net income is an appropriate measure of the
operating performance of the Company. Further, management believes,
based on feedback from analysts, cash net income is an important
measure used by analysts in their earnings estimates of the Company,
which is used by investors and potential investors. This measure
should be considered in addition to, not as a substitute for or
superior to, net income, cash flows and other measures of financial
performance prepared in accordance with GAAP. Because cash net income
is used by some investors, analysts and other users of the Company's
financial information as performance measures, they are reconciled
herein to net income.
(2) Proforma provision for income taxes is applied at an effective rate
of approximately 3.8% and 39.5% for the three months ended March 31,
2005 and 2006, respectively.
BLACKBOARD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31,
2005 2006
------------ -----------
(unaudited)
(in thousands,
except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $75,895 $32,546
Short-term investments 62,602 -
Restricted cash 521 1,978
Accounts receivable, net 26,136 26,283
Inventories 1,806 2,347
Prepaid expenses and other current assets 2,116 3,046
Deferred tax asset, current portion 10,274 11,314
Deferred cost of revenues, current
portion 5,797 5,422
------------ -----------
Total current assets 185,147 82,936
Deferred tax asset, noncurrent portion 12,023 11,701
Deferred cost of revenues, noncurrent
portion 1,310 951
Deferred merger costs (WebCT, Inc.) 4,956 -
Property and equipment, net 9,940 11,327
Goodwill 10,252 102,725
Intangible assets, net 560 72,029
------------ -----------
Total assets $224,188 $281,669
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,833 $2,440
Accrued expenses 14,083 15,877
Term loan, current portion - 600
Deferred rent, current portion 347 476
Deferred revenues, current portion 74,975 67,710
------------ -----------
Total current liabilities 91,238 87,103
Term loan, noncurrent portion, net of
debt discount - 56,806
Deferred rent, noncurrent portion 426 421
Deferred revenues, noncurrent portion 2,199 2,441
Stockholders' equity:
Common stock, $0.01 par value 275 277
Additional paid-in capital 210,805 215,228
Accumulated deficit (80,755) (80,607)
------------ -----------
Total stockholders' equity 130,325 134,898
------------ -----------
Total liabilities and stockholders' equity $224,188 $281,669
============ ===========
BLACKBOARD INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
---------------------------
2005 2006
-------- ---------
(in thousands)
Cash flows from operating activities
Net income $5,410 $148
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Deferred tax provision - (28)
Amortization of debt discount - 34
Depreciation and amortization 1,664 1,727
Amortization of intangibles resulting
from acquisitions 68 1,837
Change in allowance for doubtful accounts (301) (9)
Noncash stock-based compensation 18 1,499
Changes in operating assets and liabilities,
net of effect of acquisitions:
Accounts receivable 4,810 4,231
Inventories (15) (541)
Prepaid expenses and other current assets (742) 426
Deferred cost of revenues (1,597) 734
Accounts payable 900 335
Accrued expenses (1,825) (9,061)
Deferred rent (81) 124
Deferred revenues (9,730) (11,479)
-------- ---------
Net cash used in operating activities (1,421) (10,023)
Cash flows from investing activities
Acquisition of WebCT, Inc., net of cash
acquired - (154,628)
Purchase of property and equipment (2,428) (1,569)
Purchase of held-to-maturity securities (9,207) -
Sale of held-to-maturity securities - 23,546
Purchase of available-for-sale securities (4,500) -
Sale of available-for-sale securities 5,400 39,056
-------- ---------
Net cash used in investing activities (10,735) (93,595)
Cash flows from financing activities
Payments on equipment notes (180) -
Proceeds from revolving credit facility - 10,000
Payments on revolving credit facility - (10,000)
Proceeds from term loan 57,522
Payments on term loan - (150)
Proceeds from exercise of stock options 1,286 2,897
-------- ---------
Net cash provided by financing activities 1,106 60,269
-------- ---------
Net decrease in cash and cash equivalents (11,050) (43,349)
Cash and cash equivalents at beginning of
period 78,149 75,895
-------- ---------
Cash and cash equivalents at end of period $67,099 $32,546
======== =========
Conference Call
Blackboard will broadcast its first quarter conference call live over the
Internet today beginning at 5:00 p.m. Eastern time. 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 7:00 p.m.
Eastern (4:00 p.m. Pacific) on May 8, 2006 until 8:00 p.m. Eastern time (5:00
p.m. Pacific time) on May 15, 2006. To listen to the replay, participants in
the U.S. and Canada should dial 888-286-8010, and international participants
should dial 617-801-6888. The conference ID for the replay is 67341564.
Use of Non-GAAP Financial Measures
This release includes forecasts of the Company's cash net income which is
a non-GAAP financial measure. Management believes that cash net income, which
excludes amortization of intangibles, stock-based compensation expense, and
the associated tax impact, provides useful information to investors regarding
the Company's ongoing financial condition and results of operations. In
addition, management believes that cash net income is useful to investors
because it provides an additional basis for measuring the Company's financial
condition against other periods. Since the Company has historically reported
non-GAAP results to the investment community, management also believes the
inclusion of non-GAAP measure provides consistency in its financial reporting.
However, 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 15, 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. With two product suites, the Blackboard Academic
Suite(TM) and the Blackboard Commerce Suite(TM), Blackboard is used by
millions of people 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 and Asia.
Forward-Looking Statements
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
most recent 10-K filed with the SEC. In addition, the forward-looking
statements included in this press release represent the Company's views as of
May 8, 2006. 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 8, 2006.
SOURCE: Blackboard Inc.
CONTACT: Michael J. Stanton, Vice President, Investor Relations of
Blackboard Inc., +1-202-463-4860 ext. 2305