This summary is based on the second quarter fiscal 2007 earnings call conducted by Blackboard Inc. (BBBB: chart) on July 31, 2007.

Management

President & Chief Executive Officer: Michael Chasen
Chief Financial Officer: Mike Beach
VP of Investor Relations: Michael Stanton

Key Investors Issues

- Earnings per share were 12 cents versus a net loss of 23 cents per share in prior year.
- The firm ended the quarter with 4,921 licenses.
- New product, the Blackboard Portfolio System was introduced.
- Outstanding $19.4 million balance of acquisition debt was repaid.
- Full year net income is expected to be around $11.8 million to $12.8 million.

Second Quarter Highlights

Revenues were $59.4 million, up 36% from the prior year.

The increase in revenue was driven by continued growth in the annual licensing of enterprise level products to clients and an increased demand for ASP hosting.

- Product revenues were $52.3 million, representing an increase of 41% over 2006 while professional service revenue rose 8% to $7.1 million.
- Ratable recurring revenues increased 47% to $44.6 million, as compared to $30.5 million in the prior period. Ratable non-recurring revenues increased 17% to $5.7 million, as other revenues increased 10% to $9.1 million.

Net income was $3.4 million or 12 cents a share compared to a net loss of $6.3 million or 23 cents a share in 2006.

Non-GAAP adjusted net income for the second quarter of 2007, which excludes the amortization of acquisition-related intangible assets, net of taxes, was $6.8 million, resulting in non-GAAP adjusted net income per share of 23 cents compared to non-GAAP adjusted net loss of $2.2 million and non- GAAP adjusted net loss per share of 8 cents for the second quarter of 2006.

- Gross profit, excluding stock-based compensation and amortization of acquired technology, was $43.6 million, up 47% from $29.6 million in 2006.
- Total operating expenses decreased 3% to $29.5 million, in line with expectations. The firm incurred stock-based compensation expense of $3 million and amortization of acquired intangibles of $5.5 million.
- The outstanding $19.4 million balance of acquisition debt was repaid with the proceeds of the convertible debt offering completed in mid June, resulting in $600,000 of interest expense emanating from the acceleration of amortized debt issuance costs.

Cash and cash equivalents rose by over 400% from $31 billion in 2006 to $169.5 million due to the company''s convertible debt offering.

- Accounts receivable increased to $64.7 million at the end of the quarter up from $57.1 million in the prior year.
- Current deferred revenues were up 12% to $105.3 million. Beginning in the second quarter of 2007, the company implemented a new policy requiring all renewing clients to issue purchase orders in advance in invoicing, in order to gain greater visibility into client renewals.
- The convertible debt offering not expected to result in any material accretion to earnings during 2007.

In emerging markets, the international team succeeded in adding new business, and the K12 team won a number of competitive deals while there was great traction with ASP hosting business as institutions sought to manage their e-learning technology.

Concluded deals in the U.S. higher education market included:

- Bethune-Cookman College in Florida, to expand their disconcerting services for their 3,000 students.
- Bowie State University in Maryland and Clark College in Washington DC to better communicate and interact with their growing student bodies.
- Fairleigh Dickinson University in New Jersey, which licensed the Blackboard Academic Suite, including the Blackboard Outcome System and the ASP hosting service.
- The Mississippi Community College System, which also licensed the fully hosted implementation of the Blackboard Academic Suite, including the Blackboard Outcome System for its 65,000 students across the 15 college system.

On the international front deals involved:

- University College Cork in Ireland, which upgraded to the enterprise Blackboard Learning System.
- University of Trinidad and Tobago, which signed on to use the enterprise Blackboard Learning System product.
- University of Leeds, which licensed the Blackboard Learning System, the Blackboard Community System, and the Blackboard Content System, which will provide anytime anywhere e-Learning access for the university''s 33,000 students and 7,300 staff across nine campuses.

In K-12 deal highlights include: