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Blackboard Inc. Reports Fourth Quarter and Year End 2009 Results

Blackboard Inc. —Wednesday, February 03, 2010

Fourth Quarter Revenue Increases 18 Percent to $100.0 Million; Full Year 2009 Revenue Increases 21 Percent to $377.0 Million; John Kinzer to Succeed Mike Beach as CFO

WASHINGTON, Feb 03, 2010/via PRNewswire via COMTEX/ -- Blackboard Inc. (Nasdaq: BBBB) today announced financial results for the fourth quarter and year ended December 31, 2009 and guidance for the first quarter and full year 2010.

Blackboard's fourth quarter revenue was $100.0 million, an increase of 18 percent over the same period in 2008. Product revenue in the fourth quarter was $90.8 million, an increase of 17 percent over the $77.4 million of product revenue in the fourth quarter of last year. Professional services revenue for the quarter was $9.3 million, which represents an increase of 22 percent over the same period in 2008.

GAAP net income was $7.7 million for the fourth quarter of 2009 compared to GAAP net income of $1.8 million in the same period last year. GAAP net income per diluted share was $0.23 compared to GAAP net income per diluted share of $0.06 in the same period last year. Non-GAAP adjusted net income for the fourth quarter of 2009, which excludes the amortization of acquisition-related intangible assets, stock-based compensation, non-cash interest expense, and non-cash patent related impairment expense, all net of taxes, was $16.7 million, resulting in non-GAAP adjusted net income per diluted share of $0.49 compared to non-GAAP adjusted net income of $11.3 million and non-GAAP adjusted net income per diluted share of $0.35 for the fourth quarter of 2008.

Total revenue for the year ended December 31, 2009 was $377.0 million, an increase of 21 percent over the prior year. GAAP net income was $7.9 million for the year ended December 31, 2009 compared to GAAP net loss of ($1.9) million in the same period last year. For the year ended December 31, 2009, GAAP net income per diluted share was $0.24 compared to GAAP net loss per diluted share of ($0.06) for 2008. Non-GAAP adjusted net income for the full year 2009 was $47.0 million, resulting in non-GAAP adjusted net income per diluted share of $1.42 compared to non-GAAP adjusted net income of $34.9 million and non-GAAP adjusted net income per diluted share of $1.10 for 2008.

Additional Financial Highlights from the Fourth Quarter and Full Year 2009

• Total cash flow from operations was $20.0 million for the fourth quarter of 2009 and $109.9 million for the full year of 2009.
• Cash and cash equivalents were $167.4 million as of December 31, 2009.
• Current deferred revenues increased 12 percent year-over-year to $186.7 million as of December 31, 2009

"This was a very good year for Blackboard resulting in strong revenue and earnings performance and nearly $110 million in operating cash flows," said Michael Chasen, chief executive officer and president of Blackboard. "Our solid 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, throughout the year, the strategic investments we made in our business enabled us to expand our addressable market and meet the growing needs of our client base. We also continue to see strong traction and interest in mobile technologies as institutions are moving more of their technology focus to student handheld smart devices."

Highlights from the Fourth Quarter of 2009
Blackboard's new and expanding client relationships in the quarter included:

• U.S. Higher Education: Bronx Community College, Central Michigan University, Central New Mexico Community College, City University of New York, Indiana University-Purdue University Indianapolis, Kutztown University, Liberty University, Midwestern University, North Dakota University System - University of North Dakota, Ryerson University, St. Augustine's College, University of Oregon and others.
• International: Chulalongkorn University, Fundacao Armando Alvares Penteado (FAAP), Hartlepool College, INADEH, Interamerican University of Puerto Rico, Liverpool John Moores, South Thames College, SURF, TIO University of Hospitality and Tourism, Vaxjo University and others.
• K-12: Baltimore City Public Schools (MD), District of Columbia Public Schools (DC), Florida Virtual School (FL), KC Distance Learning (OR), Lexington County School District One (SC), Mississippi Department of Education (MS), Okaloosa County School District (FL), Saskatchewan Ministry of Education, Times Squared Academy (RI) and others.
• Professional Education (ProEd): Accenture, American Academy of Professional Coders, Appraisal Institute, Comcast, General Dynamics - National Security Education Program, Hallmark College, Herzing College, ICDC College, International Union of Operating Engineers, Novartis, Westwood College and others.
• Blackboard's enterprise licenses (Blackboard Learn - Enterprise, Blackboard Community Module, Blackboard Content Module, Blackboard Outcomes Module, Blackboard Transact, Blackboard Connect and Blackboard Mobile), totaled 7,693.
• Blackboard ended 2009 with 5,756 total clients.

Blackboard announced a partnership with NBC Learn, the educational arm of NBC News. The new partnership will allow educators and students using the Blackboard Learn platform to access NBC News Archives on demand.
Blackboard announced the launch of an application for BlackBerry(R) smartphones. The BlackBerry smartphone application enables many more users to enjoy an enhanced experience while navigating course catalogs and campus maps, e-mailing professors and classmates and receiving real time updates on course schedules, campus events, news and sports with Mobile Central, Blackboard Mobile's flagship suite of applications.

Guidance for the First Quarter of 2010

• Revenue of $98.6 to $102.6 million;

• Amortization of acquired intangibles of approximately $8.9 million;
• Stock-based compensation expense of approximately $5.1 million;
• GAAP net income of $3.2 to $5.7 million, resulting in GAAP net income per diluted share of $0.09 to $0.16, which is based on an estimated 34.8 million diluted shares, and an estimated effective tax rate of approximately 36 percent;
• Non-GAAP adjusted net income of $12.5 to $15.1 million, which excludes stock-based compensation expense, amortization of acquisition-related intangible assets, and non-cash interest expense, all net of taxes; and
• Non-GAAP adjusted net income per diluted share of $0.36 to $0.43 based on an estimated 34.8 million diluted shares and an estimated effective tax rate of approximately 38.5 percent.

Guidance for the Full Year 2010

• Revenue of $424.0 to $440.0 million;
• Amortization of acquired intangibles of approximately $32 million;
• Stock-based compensation expense of approximately $20.2 million;
• GAAP net income of $23.1 to $33.3 million, resulting in GAAP net income per diluted share of $0.65 to $0.94, which is based on an estimated 35.5 million diluted shares; and an estimated effective tax rate of approximately 36 percent;
• Non-GAAP adjusted net income of $58.6 to $68.8 million, which excludes stock-based compensation expense, amortization of acquisition-related intangible assets, and non-cash interest expense, all net of taxes;
• Non-GAAP adjusted net income per diluted share of $1.65 to $1.94 based on an estimated 35.5 million diluted shares and an estimated effective tax rate of approximately 38 percent;
• Cash flow from operations of $100.0 to $110.0 million; and
• Capital expenditures of approximately 4 to 5 percent of total revenue.

As of January 1, 2010, Blackboard early adopted Accounting Standards Update (ASU) 2009-13 and ASU 2009-14 and will apply them prospectively. Under the new accounting standards, the revenue and product cost for hardware and software sales in the Blackboard Transact product line will generally be recognized upfront following delivery to customers. Before adoption of the new accounting standards, the Company generally recognized revenues on such sales ratably over a period of time. The adoption of ASU 2009-13 and ASU 2009-14 did not impact the financial results for fiscal year 2009.

John Kinzer to Succeed Mike Beach as Chief Financial Officer Effective March 1, 2010
After more than 8 years at Blackboard, Mike Beach announced that he will retire from his CFO position. John Kinzer will succeed Mike Beach as the Company's CFO effective March 1, 2010. As part of the planned transition process, Mr. Beach will serve in an advisory capacity through the end of the second quarter.

On Mr. Beach's decision, Mr. Chasen stated, "Mike Beach is a personal friend, he has been critical in increasing value for our clients, our partners and our shareholders and I wish him the very best. Mike has built and maintained a stellar finance and accounting organization at all levels and we are fortunate to have John Kinzer as our new chief financial officer. John has worked closely with Mike and me over the years and has been instrumental in driving Blackboard's financial discipline and overall success."

Mr. Kinzer, currently Senior Vice President of Finance, has been with Blackboard since 2001. Mr. Kinzer has been an integral member of the Blackboard management team for more than eight years and played a significant role in all of Blackboard's public financings and all mergers and acquisitions. Prior to joining Blackboard, Mr. Kinzer had increasing management roles for Arthur Andersen, MCI and a technology start-up.

Commenting on his retirement from Blackboard, Mr. Beach stated, "It has been a privilege to work and be associated with my friends and colleagues at Blackboard as well as our analysts and investors. My decision to leave Blackboard has been incredibly difficult for me but is the right decision, and I look forward to spending more time with my family. I am proud of all the things we have been able to accomplish over the years at Blackboard and am confident that John will do a tremendous job over the coming years."
Michael J. Stanton Appointed Treasurer

In addition to Mr. Kinzer's promotion, Michael J. Stanton has been appointed by Blackboard's Board of Directors as Senior Vice President and Treasurer effective March 1, 2010. Mr. Stanton, currently Senior Vice President, has been with Blackboard since 2000 managing a range of responsibilities including the Company's banking and investor relations as well as global treasury operations.

Blackboard will also broadcast its conference call live over the Internet beginning at 4:30 p.m. on February 3, 2010, 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 3, 2010 until 11:00 p.m. Eastern (8:00 p.m. Pacific) on February 10, 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 96236089.

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.