BBBB Blackboard (MM)

WASHINGTON, Aug. 3, 2011 /PRNewswire/ -- Blackboard Inc. (NASDAQ: BBBB) today announced financial results for the second quarter ended June 30, 2011.  

Total GAAP revenue for the quarter ended June 30, 2011 was $124.2 million, an increase of 15 percent over the second quarter of 2010. Product revenues for the quarter were $114.3 million, an increase of 17 percent over the second quarter of 2010, while professional services revenues for the quarter were $9.9 million, a decrease of 4 percent from the second quarter of 2010.  GAAP net loss was ($4.1) million, resulting in net loss per basic and diluted share of ($0.12) for the second quarter of 2011 compared to net income of $4.4 million or net income per basic and diluted share of $0.13 for the second quarter of 2010.

Total non-GAAP revenue for the quarter ended June 30, 2011 was $127.5 million, an increase of 23 percent over the second quarter of 2010. Non-GAAP adjusted net income for the second quarter of 2011 was $11.1 million, resulting in non-GAAP adjusted net income per diluted share of $0.31 compared to non-GAAP adjusted net income of $13.0 million or $0.37 per diluted share for the second 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."

Summary Financial Highlights from the Second Quarter of 2011

• Non-GAAP revenue of $127.5 million, an increase of 23 percent over the second quarter of 2010.
• Non-GAAP adjusted net income per diluted share of $0.31.
• Deferred revenue was $219.2 million, an increase of 47 percent over the second quarter of 2010.
• Cash and cash equivalents were $84.7 million at the end of the second quarter of 2011.
• Total transaction-related expenses of approximately $7.1 million, including costs associated with Blackboard's proposed acquisition by Providence Equity Partners.

Highlights from the Second Quarter of 2011

• McGraw-Hill Higher Education and Blackboard announced a partnership to combine McGraw-Hill's media-rich content, assessment engines and industry leading adaptive learning tools with the latest capabilities of Blackboard's online teaching and learning platform, Blackboard Learn™.
• Blackboard opened a new data center in Canada, responding to growing interest from Canadian institutions for an in-region facility to host and manage their learning environments. The new data center is located in Calgary, Alberta, Canada.
• Blackboard announced full support for Common Cartridge 1.1, making Blackboard Learn™, Release 9.1 the first learning platform to support the newest version of a key industry standard that makes it easier for instructors to share educational content and resources.

Proposed Acquisition by Providence Equity Partners

On July 1, 2011, Blackboard announced that it had entered into a definitive merger agreement under which Blackboard will be acquired by an affiliate of Providence Equity Partners in an all-cash transaction. Pursuant to terms of the agreement, Blackboard shareholders will receive $45.00 in cash for each share of common stock.

The transaction is subject to the approval of a majority of the outstanding shares of Blackboard and other customary closing conditions and regulatory approvals. The transaction is anticipated to close during the second half of 2011.

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.

Additional Information and Where to Find It

Blackboard intends to file with the Securities and Exchange Commission (the "SEC") a proxy statement in connection with the proposed transaction.  The definitive proxy statement will be sent or given to the stockholders of Blackboard and will contain important information about the proposed transaction and related matters.  BEFORE MAKING ANY VOTING DECISION, BLACKBOARD'S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT CAREFULLY AND IN ITS ENTIRETY BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.  The proxy statement and other relevant materials (when they become available), and any other documents filed by Blackboard with the SEC, may be obtained free of charge at the SEC's website at www.sec.gov.  In addition, security holders will be able to obtain free copies of the proxy statement from Blackboard by contacting Blackboard's Investor Relations Department (i) by mail to Blackboard Inc., 650 Massachusetts Avenue, NW, 6th Floor, Washington, DC 20001, Attn: Investor Relations Department, (ii) by telephone at 202-463-4860 or (iii) by e-mail to Investor@Blackboard.com.

Participants in the Solicitation

Blackboard and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Blackboard's stockholders in connection with the proposed transaction.  Information about Blackboard's directors and executive officers is set forth in Blackboard's proxy statement for its 2011 Annual Meeting of Stockholders, which was filed with the SEC on April 21, 2011, and its Annual Report on Form 10-K for the year ended December 31, 2010, which was filed with the SEC on February 18, 2011.  These documents are available free of charge at the SEC's web site at www.sec.gov, and from Blackboard by contacting Blackboard's Investor Relations Department (i) by mail to Blackboard Inc., 650 Massachusetts Avenue, NW, 6th Floor, Washington, DC 20001, Attn: Investor Relations Department, (ii) by telephone at 202-463-4860 or (iii) by e-mail to Investor@Blackboard.com.  Additional information regarding the interests of participants in the solicitation of proxies in connection with the transaction will be included in the proxy statement that Blackboard intends to file with the SEC.

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 but not limited to: the ability of the parties to consummate the proposed transaction with Providence in a timely manner or at all; the satisfaction of conditions precedent to consummation of the transaction, including the ability to secure regulatory approvals and approval by Blackboard's stockholders; successful completion of anticipated financing arrangements; the possibility of litigation (including litigation related to the transaction itself); and other risks described in Blackboard's filings with the SEC, including the factors discussed in the "Risk Factors" section of our Form 10-K filed on February 18, 2011 and Form 10-Q filed on May 9, 2011 with the SEC. In addition, the forward-looking statements included in this press release represent the Company's views as of August 3, 2011. 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 3, 2011.

Use of Non-GAAP Financial Measures

This release includes information about the Company's 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 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 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 reflects non-GAAP measures and other items as determined by the Board of Directors.

In 2010, the Company's 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 Company's non-GAAP financial measures will also exclude certain impacts of acquisitions. Specifically, the Company's 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 GAAP's 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 Company's economic activities. Further, the Company's 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 Company's 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 Company's Form 10-K dated February 18, 2011 and Form 10-Q dated May 9, 2011, as well as other filings with the Securities and Exchange Commission when assessing the Company's 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.

SOURCE Blackboard Inc.