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8-K - FORM 8-K - BLACKBOARD INC | w82727e8vk.htm |
Exhibit 99.1
Blackboard Inc. Reports First Quarter Revenue of
$118.8 million and Non-GAAP Revenue of $123.0
Million
$118.8 million and Non-GAAP Revenue of $123.0
Million
Washington, DC May 9, 2011 Blackboard Inc. (NASDAQ: BBBB) today announced financial
results for the first quarter ended March 31, 2011 and updated guidance for the second quarter and
the full year of 2011.
Total GAAP revenue for the quarter ended March 31, 2011 was $118.8 million, an increase of 18
percent over the first quarter of 2010. Product revenues for the quarter were $109.4 million, an
increase of 17 percent over the first quarter of 2010, while professional services revenues for the
quarter were $9.4 million, an increase of 28 percent over the first quarter of 2010. GAAP net loss
was ($3.4) million, resulting in net loss per basic and diluted share of ($0.10) for the first
quarter of 2011 compared to net income of $5.0 million or net income per basic and diluted share of
$0.15 for the first quarter of 2010.
Total non-GAAP revenue for the quarter ended March 31, 2011 was $123.0 million, an increase of 28
percent over the first quarter of 2010. Non-GAAP adjusted net income for the first quarter of 2011
was $9.9 million, resulting in non-GAAP adjusted net income per diluted share of $0.28 compared to
non-GAAP adjusted net income of $12.7 million or $0.37 per diluted share for the first quarter of
2010.
For a discussion of the non-GAAP financial measures used in this release and the reconciliations of
the non-GAAP financial measures to the most directly comparable GAAP financial measures, please
refer to the section below entitled Use of Non-GAAP Financial Measures.
Our business is off to a strong start for the year, said Michael Chasen, chief executive officer
and president of Blackboard. The investments we are making are allowing us to improve product
quality and enhance overall client satisfaction. In the quarter, we experienced strong demand for
our newest product, Blackboard AnalyticsSM as well as continued strong interest in
Blackboard Mobile Learn and Blackboard Mobile Central. Finally, our Blackboard Learn Release
9.1 platform continues to lead the market as the most widely adopted enterprise learning system
globally.
Summary Financial Highlights from the First Quarter of 2011
| Non-GAAP revenue of $123.0 million, an increase of 28 percent over the first quarter of 2010. |
| Non-GAAP adjusted net income per diluted share of $0.28. | ||
| Deferred revenue was $185.3 million, an increase of 18 percent over the first quarter of 2010. | ||
| Cash and cash equivalents were $52.7 million at the end of first quarter of 2011. |
Highlights from the First Quarter of 2011
| Blackboards new and expanding client relationships in the quarter included: |
o | U.S. Higher Education Market: Burlington County College, City University of New York, Enterprise State Community College, Georgia Health Sciences University, Ivy Tech Community College, Southern New Hampshire University, St. Edwards University, Tallahassee Community College, Texas A&M University Texarkana, University of Alberta-School of Business, University of Arkansas-Little Rock, University of Idaho, University of North Carolina-Greensboro, Vanderbilt University, Washington University, Western University, University of Wilmington and others. | ||
o | International Markets: Hartlepool College, Instituto Profesional DUOC, King Saud University for Health and Sciences, KU Leuven, Nanyang Polytechnic University, Sheffield Hallam University, Technical and Vocational Training Center, Universal Training Solutions Pvt. Limited, Universidad Camila Jose Cela, Universidad de Sevilla, University of Aberdeen, University of Aegean, University of Central Lancashire, University of Dammam, University of Groningen, University of Qatar and others. | ||
o | K-12 Market: Butler Technology and Career Development Schools (OH), Crane Elementary School District (AZ), Freemont Union High School (CA), Grand Prairie Independent School District (TX), Idaho Digital Learning Academy (ID), Lawrence Public Schools (MA), Metro Nashville Public Schools (TN), Missoula County Public School District 1 (MT), Newport News Public Schools (VA), Puerto Rico Department of Education (PR) and others. | ||
o | Professional Education (ProEd): Capella University, Education Affiliates, Defense Acquisition University, Georgia Public Safety Training Center, Globe University, Marine Corps University, National Strength and Conditioning Association, Strayer University, WorldatWork and others. |
| Blackboard launched Blackboard Analytics, a new solution for data analytics and business intelligence in education, designed to help educational institutions make better use of available data to optimize resources and inform important decisions across the institution. |
| Blackboard launched CourseSites, a free, fully hosted online course system for instructors featuring Blackboards latest teaching and learning technologies. | ||
| During the quarter, Blackboard acquired txttools Limited, a provider of mass notification solutions in the United Kingdom and Ireland. |
Outlook for the Second Quarter and Full Year of 2011
Second Quarter of 2011:
| GAAP revenue of approximately $122.6 million; | ||
| Amortization of acquired intangibles of approximately $7.7 million; | ||
| Stock-based compensation expense of approximately $5.7 million; | ||
| GAAP net loss of approximately ($1.8) million; | ||
| GAAP net loss per basic share of approximately ($0.05) based on an estimated 35.7 million basic shares and an estimated GAAP effective tax rate of approximately 33.0 percent; | ||
| Non-GAAP revenue of approximately $126.0 million; | ||
| Non-GAAP net income of approximately $9.9 million; and | ||
| Non-GAAP net income per diluted share of approximately $0.27 based on an estimated 36.3 million diluted shares and an estimated non-GAAP effective tax rate of approximately 41.0 percent. |
Full Year 2011:
| GAAP revenue of approximately $530.7 million; | ||
| Amortization of acquired intangibles of approximately $32.1 million; | ||
| Stock-based compensation expense of approximately $23.1 million; | ||
| GAAP net income of approximately $23.4 million; | ||
| GAAP net income per diluted share of approximately $0.65 based on an estimated 36.2 million diluted shares and an estimated GAAP effective tax rate of approximately 33.0 percent; | ||
| Non-GAAP revenue of approximately $540.0 million; | ||
| Non-GAAP net income of approximately $66.0 million; | ||
| Non-GAAP net income per diluted share of approximately $1.83 based on an estimated 36.2 million diluted shares and an estimated non-GAAP effective tax rate of approximately 37.0 percent; and | ||
| Free cash flow (cash flow from operations less purchases of property and equipment) of approximately $90.0 to $100.0 million. |
Review of Strategic Alternatives
On April 19, 2011, Blackboard announced that the Board of Directors has retained Barclays Capital
as its financial advisor in response to receiving unsolicited, non-binding offers to acquire the
company. The Board continues to evaluate the offers as well as strategic alternatives to enhance
shareholder value, including whether other third parties would have an interest in acquiring the
company at a price and on terms that would
represent a better value for its shareholders than having the company continue to execute its
business plan on a stand-alone basis.
There can be no assurance that the process described above will result in a transaction. Blackboard
undertakes no obligation to provide further updates.
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 Companys 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 9, 2011 until 11:00 p.m. Eastern (8:00 p.m. Pacific) on May 12, 2011. 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
27476887.
BLACKBOARD INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Three Months Ended | ||||||||
March 31 | March 31 | |||||||
2010 | 2011 | |||||||
Revenues: |
||||||||
Product |
$ | 93,730 | $ | 109,385 | ||||
Professional services |
7,336 | 9,371 | ||||||
Total revenues |
101,066 | 118,756 | ||||||
Operating expenses: |
||||||||
Cost of product revenues, excludes $2,508 and $1,560
for the three months ended March 31, 2010 and 2011,
respectively, in amortization of acquired technology
included in amortization of intangibles resulting from
acquisitions shown below (1) |
24,534 | 34,410 | ||||||
Cost of professional services revenues (1) |
4,479 | 6,679 | ||||||
Research and development (1) |
12,205 | 16,571 | ||||||
Sales and marketing (1) |
25,315 | 34,639 | ||||||
General and administrative (1) |
14,705 | 18,670 | ||||||
Amortization of intangibles resulting from acquisitions |
8,978 | 9,171 | ||||||
Total operating expenses |
90,216 | 120,140 | ||||||
Income (loss) from operations |
10,850 | (1,384 | ) | |||||
Other expense, net: |
||||||||
Interest expense |
(2,888 | ) | (3,162 | ) | ||||
Interest income |
21 | 22 | ||||||
Other expense, net |
(527 | ) | (432 | ) | ||||
Income (loss) before (provision for) benefit from income taxes |
7,456 | (4,956 | ) | |||||
(Provision for) benefit from income taxes |
(2,420 | ) | 1,600 | |||||
Net income (loss) |
$ | 5,036 | $ | (3,356 | ) | |||
Net income (loss) per common share: |
||||||||
Basic |
$ | 0.15 | $ | (0.10 | ) | |||
Diluted |
$ | 0.15 | $ | (0.10 | ) | |||
Weighted average number of common shares: |
||||||||
Basic |
33,432,192 | 34,756,370 | ||||||
Diluted |
34,397,711 | 34,756,370 | ||||||
(1) Includes the following amounts related to stock-based compensation: |
||||||||
Cost of product revenues |
$ | 337 | $ | 354 | ||||
Cost of professional services revenues |
148 | 204 | ||||||
Research and development |
268 | 336 | ||||||
Sales and marketing |
1,868 | 2,088 | ||||||
General and administrative |
2,335 | 2,389 |
BLACKBOARD INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(in thousands, except share and per share amounts)
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(in thousands, except share and per share amounts)
Three Months Ended | |||||||||||
March 31 | March 31 | ||||||||||
2010 | 2011 | ||||||||||
Reconciliation of GAAP revenue to non-GAAP revenue (1): |
|||||||||||
GAAP revenue |
$ | 101,066 | $ | 118,756 | |||||||
Add: Deferred revenue not recorded in purchase accounting |
924 | 4,241 | |||||||||
Less: Transact revenue recognition change |
(6,252 | ) | | ||||||||
Non-GAAP revenue |
$ | 95,738 | $ | 122,997 | |||||||
Reconciliation of GAAP net income before provision for income taxes to non-GAAP adjusted net income (1): |
|||||||||||
GAAP net income (loss) before provision for income taxes |
$ | 7,456 | $ | (4,956 | ) | ||||||
Add: Deferred revenue not recorded in purchase accounting |
924 | 4,241 | |||||||||
Less: Transact revenue recognition change including related costs |
(4,963 | ) | | ||||||||
Add: Transition, integration and transaction-related expenses |
663 | 1,281 | |||||||||
Add: Amortization of intangibles resulting from acquisitions |
8,978 | 9,171 | |||||||||
Add: Stock-based compensation |
4,956 | 5,371 | |||||||||
Add: Non-cash interest expense |
1,528 | 1,649 | |||||||||
Add: Non-cash loss on foreign exchange translation |
527 | 203 | |||||||||
Adjusted provision for income taxes (2) |
(7,402 | ) | (7,057 | ) | |||||||
Non-GAAP adjusted net income |
$ | 12,667 | $ | 9,903 | |||||||
Non-GAAP adjusted net income per common share diluted |
$ | 0.37 | $ | 0.28 | |||||||
Weighted average number of diluted common shares |
34,397,711 | 35,299,679 | |||||||||
Reconciliation of GAAP net cash provided by operating activities to non-GAAP free cash flow (1): |
|||||||||||
Net cash used in operating activities |
$ | (1,229 | ) | $ | (7,085 | ) | |||||
Less: Purchases of property and equipment |
(3,165 | ) | (5,765 | ) | |||||||
Free cash flow |
$ | (4,394 | ) | $ | (12,850 | ) | |||||
(1) Non-GAAP adjusted net income, non-GAAP adjusted net income per share,
non-GAAP revenue and free cash flow are non-GAAP financial measures and have no
standardized measurement prescribed by GAAP. Management believes that these
measures provide additional useful information to investors regarding the
Companys ongoing financial condition and results of operations and aspects of
current operating performance that can be effectively managed. Because the
Company has historically reported 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 Companys historic operating trends by
providing 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. The Company compensates for these limitations
by providing full disclosure of each non-GAAP financial measure and the
reconciliations above 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 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.
(2) Adjusted provision for income taxes is applied at an effective rate of
approximately 36.9% and 41.6% for the three months ended March 31, 2010 and
2011, respectively.
BLACKBOARD INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
December 31, | March 31 | |||||||
2010 | 2011 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 70,314 | $ | 52,729 | ||||
Accounts receivable, net |
89,914 | 82,906 | ||||||
Prepaid expenses and other current assets |
16,961 | 17,358 | ||||||
Deferred tax asset, current portion |
5,818 | 5,818 | ||||||
Deferred cost of revenues |
3,256 | 3,107 | ||||||
Total current assets |
186,263 | 161,918 | ||||||
Deferred tax asset, noncurrent portion |
15,185 | 19,341 | ||||||
Restricted cash |
5,741 | 5,741 | ||||||
Property and equipment, net |
43,002 | 42,691 | ||||||
Other assets |
1,582 | 961 | ||||||
Goodwill |
478,728 | 481,811 | ||||||
Intangible assets, net |
116,649 | 112,881 | ||||||
Total assets |
$ | 847,150 | $ | 825,344 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 1,818 | $ | 1,383 | ||||
Accrued expenses |
41,018 | 44,827 | ||||||
Deferred rent, current portion |
450 | 678 | ||||||
Deferred revenues, current portion |
211,752 | 179,481 | ||||||
Convertible senior notes, net of debt discount |
162,326 | 163,826 | ||||||
Total current liabilities |
417,364 | 390,195 | ||||||
Deferred rent, noncurrent portion |
11,978 | 11,805 | ||||||
Deferred tax liability, noncurrent portion |
3,502 | 4,936 | ||||||
Deferred revenues, noncurrent portion |
6,223 | 5,857 | ||||||
Stockholders equity: |
||||||||
Common stock, $0.01 par value |
347 | 347 | ||||||
Additional paid-in capital |
465,908 | 472,651 | ||||||
Accumulated other comprehensive income, net |
794 | 1,875 | ||||||
Accumulated deficit |
(58,966 | ) | (62,322 | ) | ||||
Total stockholders equity |
408,083 | 412,551 | ||||||
Total liabilities and stockholders equity |
$ | 847,150 | $ | 825,344 | ||||
BLACKBOARD INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended | ||||||||
March 31 | ||||||||
2010 | 2011 | |||||||
(in thousands) | ||||||||
Cash flows from operating activities |
||||||||
Net income (loss) |
$ | 5,036 | $ | (3,356 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
Deferred income tax benefit |
(398 | ) | (3,849 | ) | ||||
Excess tax benefits from stock-based compensation |
(2,800 | ) | (232 | ) | ||||
Amortization
of debt discount and issuance costs |
1,528 | 1,649 | ||||||
Depreciation and amortization |
4,629 | 6,076 | ||||||
Amortization of intangibles resulting from acquisitions |
8,978 | 9,171 | ||||||
Change in allowance for doubtful accounts |
(316 | ) | (195 | ) | ||||
Stock-based compensation |
4,956 | 5,371 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
18,488 | 7,583 | ||||||
Prepaid expenses and other current assets |
1,807 | 122 | ||||||
Deferred cost of revenues |
1,112 | 149 | ||||||
Accounts payable |
(1,628 | ) | (469 | ) | ||||
Accrued expenses |
(3,571 | ) | 3,814 | |||||
Deferred rent |
(173 | ) | 55 | |||||
Deferred revenues |
(38,877 | ) | (32,974 | ) | ||||
Net cash used in operating activities |
(1,229 | ) | (7,085 | ) | ||||
Cash flows from investing activities |
||||||||
Purchases of property and equipment |
(3,165 | ) | (5,765 | ) | ||||
Acquisitions, net of cash acquired |
(34,912 | ) | (6,107 | ) | ||||
Net cash used in investing activities |
(38,077 | ) | (11,872 | ) | ||||
Cash flows from financing activities |
||||||||
Releases of letters of credit |
27 | | ||||||
Excess tax benefits from stock-based compensation |
2,800 | 232 | ||||||
Proceeds from exercise of stock options |
15,402 | 1,140 | ||||||
Net cash provided by financing activities |
18,229 | 1,372 | ||||||
Net decrease in cash and cash equivalents |
(21,077 | ) | (17,585 | ) | ||||
Cash and cash equivalents at beginning of period |
167,353 | 70,314 | ||||||
Cash and cash equivalents at end of period |
$ | 146,276 | $ | 52,729 | ||||
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.
Blackboards 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-K filed on February 18, 2011 with the SEC.
In addition, the forward-looking statements included in this press release represent the Companys
views as of May 9, 2011. The Company anticipates that subsequent events and developments will cause
the Companys 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 Companys views as
of any date subsequent to May 9, 2011.
Use of Non-GAAP Financial Measures
This release includes information about the Companys non-GAAP revenue, non-GAAP net income,
non-GAAP net income per diluted share, and free cash flow, which are non-GAAP financial measures.
Management believes that these measures provide additional useful information to investors
regarding the Companys ongoing financial condition and results of operations and aspects of
current operating performance that can be effectively managed. Because the Company has historically
reported 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 Companys historic operating trends by providing an
additional basis for comparisons to prior periods. In addition, the Companys internal reporting,
including information provided to the Companys 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 reflects non-GAAP measures and other items as determined by the Board of Directors.
In 2010, the Companys non-GAAP net income and non-GAAP net income per diluted share excluded the
amortization or impairment of intangible assets, stock-based compensation expense and non-cash
interest expense, all net of taxes. Beginning in 2011, the Companys non-GAAP financial measures
will also exclude certain impacts of acquisitions. Specifically, the Companys non-GAAP revenue,
non-GAAP net income
and non-GAAP net income per diluted share measures will include deferred
revenue of
entities we have acquired that would have been recognized but for GAAPs purchase accounting
treatment requiring the elimination of this deferred revenue upon acquisition. While we cannot be
certain that customers will renew the contracts that generated the deferred revenue, the Company
has historically experienced high renewal rates and we believe GAAP results, which eliminate the
recognition of these deferred revenues, alone do not fully capture all of the Companys economic
activities. Further, the Companys non-GAAP net income and non-GAAP net income per diluted share
measure will include the deferred revenue adjustment and exclude certain transition, integration
and transaction-related expense items resulting from acquisitions and non-cash translation gains or
losses, all net of taxes. The Company does not consider these adjustments to be related to the
organic continuing operations of the acquired businesses and they are generally not relevant to
assessing or estimating the long-term performance of the acquired assets. Although
acquisition-related revenue and expenses are generally non-recurring with respect to past
acquisitions, the Company generally will incur these adjustments in connection with any future
acquisitions; however, the size, complexity and/or volume of past acquisitions, which often drives
the magnitude of acquisition-related costs, may not be indicative of the size, complexity and/or
volume of future acquisitions. Because the Company considers these revenue and expense adjustments,
to a great extent, to be unpredictable and dependent on a significant number of factors that are
outside of the control of the Company, the non-GAAP measures that exclude these adjustments allow
management to better evaluate the Companys ability to utilize its existing assets and estimate the
long-term value that acquired assets will generate for the Company. For the same reasons, the
non-GAAP measures will be useful to investors because they will allow for more complete comparisons
of forward-looking guidance to the financial results of historical operations and the financial
results of peer companies.
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 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 Companys Form 10-K dated
February 18, 2011, as well as other filings with the Securities and Exchange Commission when
assessing the Companys financial condition and results of operations. A reconciliation of GAAP to
non-GAAP revenue, non-GAAP net income, non-GAAP net income per diluted share and non-GAAP free cash
flow is included in this press release.
Contacts:
For Financial Media and Investors:
Michael J. Stanton
Senior Vice President, Investor Relations
Blackboard Inc.
+1 (202) 463-4860 ext. 2305
Blackboard Inc.
+1 (202) 463-4860 ext. 2305
For Education & General Media:
Matthew Maurer
Director, Public Relations
+1 (202) 463-4860 ext. 2637
matthew.maurer@blackboard.com
Director, Public Relations
+1 (202) 463-4860 ext. 2637
matthew.maurer@blackboard.com
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