BLACKBOARD INC.
ABOUT
Blackboard Inc.
Blackboard Inc. (NASDAQ: BBBB) is a leading provider of enterprise software and services to the education industry. The Company’s product line consists of
five software applications bundled in two suites, the Blackboard Academic Suite™ and the Blackboard Commerce Suite™. Blackboard’s clients include colleges,
universities, 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, DC, with offices and staff in North America, Europe and Asia.
FINANCIAL
Highlights
($ in millions)
Year Ended December 31,
2002
2003
2004
Revenues
Product
Professional Services
$ 62.4
7.5
$83.3
9.2
$ 98.6
12.8
Total Revenues
Operating Expenses
Cost of Product Revenues
Cost of Professional Services Revenues
Research and Development
Sales and Marketing
General and Administrative
Amortization of Intangibles Resulting from Acquisitions
Stock-Based Compensation
$ 69.9
$92.5
$111.4
$ 21.5
5.7
10.3
24.2
16.5
5.5
0.5
$23.1
6.6
11.4
30.9
14.7
5.8
0.3
$ 25.9
8.0
13.7
35.2
14.9
3.5
0.2
Total Operating Expenses
(Loss) Income from Operations
Net (Loss) Income (1)
$ 84.2
$(14.2)
$92.8
$ (0.3)
$101.4
$ 10.0
$(41.7)
$ 1.4
$ (1.4)
$ 19.7
$ 10.0
$ 32.7
Net Cash Provided by Operating Activities
(1) Includes $26.6 million for the cumulative effect of change in accounting principle in 2002.
$111.4
2004 total revenues
TOTAL REVENUES
million
($ in millions)
’02
’03
$69.9
$92.5
$111.4
’04
$32.7
CASH FLOW FROM OPERATIONS
2004 cash flow from operations
million
($ in millions)
’02
’03
’04
$1.4
$19.7
$32.7
TO OUR FELLOW
Shareholders
2004 was a milestone year for Blackboard. We are pleased to share a few words to
highlight our accomplishments, thank those responsible and, most importantly,
outline the critical elements of our growth strategy that will drive Blackboard
to new heights in 2005. We founded Blackboard with the vision of transforming
the Internet into a powerful environment for teaching and learning. And
while we still have a long way to go, 2004 brought great progress towards that
important goal.
Driving Shareholder Value Through Client Success…
When we speak of a milestone year in 2004, we do so across a number of the
strategic objectives that drive Blackboard’s growth strategy. Our strategy can
be thought of most simply as continuing to establish Blackboard as a leading
technology platform for the global education industry, and the consequent
weaving of our applications into the fabric of our clients’ teaching, learning
and commerce activities.
Our progress in 2004 towards this end has been noteworthy:
1. Our core U.S. higher education license count grew by 15% over 2003.
2. We demonstrated the opportunities that lie beyond the U.S. higher education
market, by having stronger than expected growth in the U.S. K–12 and
international markets.
3. We grew the average number of licenses a client runs and our average contract
value per client, confirming the value of our broader suites of solutions and
the strength of our client relationships.
4. We achieved 92% renewal rates, exceeding our own expectations and validating
the value of Blackboard solutions to our clients.
5. We made significant progress expanding the client base of our two newest
applications—Blackboard Content System™ and BbOne .
®
6. We saw our first joint venture, the Chinese eLearning company Cerbibo,
build a strong foothold in a fast-growing market.
What do these strategic milestones mean for increasing shareholder value? Our
financial performance for 2004 provides the answer. For the full year 2004, we
generated revenues of $111.4 million, a 20% increase over 2003, and earnings
per diluted share of $0.21, a 110% increase over 2003. We expanded our gross
margins to a Company record of 70% while investing $13.7 million in product
development. Blackboard again generated significant cash, ending the year with
cash flow from operations of $32.7 million, a 66% increase compared to 2003 cash
flow from operations of $19.7 million. We are proud of these accomplishments
and expect to build on our success in 2005.
The Blackboard Community of Practice…
There is no question as to who deserves our sincere appreciation for accomplishing
the milestones listed above. The concept of a “Community of Practice” is an
important one for Blackboard. Our combination of over 2,200 clients, millions
of end users, 420 independent software vendors (ISVs), leading educationpublishing partners, 600 merchants, and 481 employees at the end of 2004,
positions Blackboard uniquely in the global education market. Our network—
of people, ideas and technology—is both our platform for growth and the
object of our fiduciary responsibility. We thank our clients, partners, and you, our
investors, for helping make possible our record positive financial and strategic
performance. We especially thank our hard-working and talented employees.
The Year Ahead…
As we proceed into 2005, our goals include continued revenue growth, diligent
operational cost control, and ongoing strategic investments to increase market
share in the global higher education and U.S. K–12 markets. Again, we are
focused on the following major strategic objectives:
1. Increasing the breadth of our U.S. higher education leadership position;
2. Growing the depth of our existing client relationships;
3. Expanding our leadership position in the fast-growing emerging markets of
U.S. K–12 and global higher education;
4. Retaining our clients through great products and high-quality service
and support;
5. Continuing our pace of innovation through new product introductions; and
6. Selectively considering the acquisition or license of businesses, products or
technologies that are complementary to our business and the objectives set forth.
Our future depends on making the client experience with Blackboard the best
in the industry. The Blackboard Academic Suite™ and Blackboard Commerce
Suite ™ software product lines support a broad spectrum of mission-critical
activities, including course creation and management, content management,
performance evaluation, online community development, campus transaction
processing and off-campus merchant relations, to name a few. Students, faculty
and administrators in 64 countries depend on our success.
Again, we express our thanks to you, our shareholders, for your continued support—
support that will help Blackboard to succeed and grow in 2005 and beyond.
We remain steadfastly committed to enhancing shareholder value and ensuring
the long-term success of our business through the accomplishments of our
global client base. It is our pleasure to serve you and our clients everywhere.
Matthew Pittinsky
Michael Chasen
Chairman of the Board
Chief Executive Officer
© 2005 Blackboard Inc. All rights reserved. Blackboard, the Blackboard logo, Blackboard Learning System, Blackboard Content System, Blackboard Community System,
Blackboard Transaction System, Blackboard Academic Suite, Blackboard Commerce Suite, Blackboard Building Blocks, and/or other Blackboard products referenced herein
are trademarks of Blackboard Inc. and may be registered in certain jurisdictions. All other trademarks and registered trademarks are the property of their respective owners.
CORPOR ATE
Director y
Board of Directors
Mary E. Good
Matthew L. Pittinsky
Senior Vice President,
Human Resources and Facilities
Chairman
Blackboard Inc.
Michael L. Chasen
Chief Executive Officer and President
Blackboard Inc.
Frank R. Gatti
Chief Financial Officer
Educational Testing Service
Steven B. Gruber
Managing Partner
Oak Hill Capital Management, Inc.
Arthur E. Levine
President and Professor of Education
Teachers College, Columbia University
E. Rogers Novak, Jr.
Managing Member
Novak Biddle Venture Partners
William Raduchel
Chairman and Chief Executive Officer
Ruckus Network Inc.
Corporate Officers
Matthew L. Pittinsky
Chairman
Michael L. Chasen
Chief Executive Officer and President
Peter Q. Repetti
Chief Financial Officer
George D. Calvert
Senior Vice President,
Product Development
James Hermens
Senior Vice President,
Global Services and Support
Tim Hill
Senior Vice President, Marketing
Matthew H. Small
Senior Vice President, Legal,
General Counsel and Secretary
Michael J. Beach
Vice President, Finance and Treasurer
Corporate Headquarters
Blackboard Inc.
1899 L Street, NW, 5th Floor
Washington, DC 20036
Investor Materials
For further information about
Blackboard, additional copies
of this report, Form 10-K or other
financial literature contact:
Michael Stanton
Senior Director, Investor Relations
Blackboard Inc.
1899 L Street, NW, 5th Floor
Washington, DC 20036
202.463.4860
You may also learn more about
Blackboard by visiting the
Investor Center on our website at
investor.blackboard.com
Todd E. Gibby
Senior Vice President, Sales
Please visit us at www.blackboard.com
for more shareholder information.
Legal Counsel
Wilmer Cutler Pickering Hale
and Dorr LLP
Washington, DC
Independent Registered
Public Accounting Firm
Ernst & Young LLP
McLean, VA
Transfer Agent
and Registrar
American Stock
Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
800.937.5449
www.amstock.com
Stock Listing
Blackboard’s common stock is traded
on the NASDAQ Stock Market under
the symbol “BBBB.”
Notice of Annual
Meeting
Sheraton Four Points Hotel
1201 K Street, NW
Washington, DC 20005
May 19, 2005, 11 a.m.
BLACKBOARD INC.
HEADQUARTERS
1899 L Street, NW, 5th Floor
Washington, DC 20036
T: 202.463.4860
F: 202.463.4863
www.blackboard.com