This summary is based on the fourth quarter fiscal 2006 earnings call conducted by Blackboard Inc. (BBBB: chart) on February 6, 2007.

Management:

- President, Chief Executive Officer: Michael L. Chasen
- Chief Financial Officer: Michael J. Beach
- Vice President, Investor Relations: Michael J. Stanton

Key Investors Issues

- Revenues rose 44% from $35.7 million in 2005 to $51.4 million.
- Net income was $201,000 or 1 cent a share, down 113%.
- The company’s gross margin was reported to be 73%.

Full Year Highlights:

- Revenue increased 35% to $183.1 million over 2005 from $135 million.
- The firm realised a net loss of $10.7 million or 39 cents a share, from a profit of $41.9 million or $1.57 a share in 2005.
- Cash and cash equivalents decreased to $30.8 million.

Fourth Quarter Highlights

Revenues increased year-over-year by 44% to $51.4 million from $35.7 million in 2005 driven by growth in licensing of enterprise level products to global academic institutions including clients from the acquisition of WebCT.

- Product revenue increased 46% to $46.8 million, and professional service revenue increased 25% to $4.6 million, over the same quarter prior year.
- The firm recognized $2.1 million of revenue related to the opening acquired deferred revenue balance from WebCT, reflecting $1.6 million less revenue than WebCT would have recognized as a standalone company.
- Ratable recurring revenues increased 53% to $39.7 million, as compared to $26 million in the same quarter prior year.
- Ratable non-recurring revenues increased 20% to $5.4 million, as compared to $4.5 million in the same quarter prior year.
- Other revenues increased 19% to $6.3 million, from $5.3 million in the same quarter prior year.

Net income was $200,000 or 1 cent per share down 113% from $23.1 million or 85 cents a share in 2005 on higher operating expenses.

- Gross profit, excluding stock-based compensation and the amortization of acquired intangibles, increased 48% to $37.3 million, as compared to $25.2 million in the same quarter prior year.
- Total operating expenses, excluding the cost of revenues, stock-based compensation and the amortization of acquired intangibles, increased by 55% to $28.3 million, as compared to $18.2 million in the prior year.
- Non-recurring integration costs were $1.6 million, and the firm incurred stock based compensation expense of $2 million.
- Amortization of acquired intangibles was $5.4 million, and the company prepaid $20 million of its long-term debt, and as a result of this prepayment it incurred an additional $700,000 of interest expense resulting from the acceleration of amortized debt issuance cost.

The company closed the quarter with $30.8 million in cash and cash equivalents, and plans to use certain access available cash balance to reduce its outstanding term loan, which was $24.4 million at the end of the quarter.

- Accounts receivables increased to $52.4 million from $26.1 million for the same quarter prior year.
- The DSOs increased compared to fourth quarter 2005 primarily as a result of invoice timing and part due to renewal timing of clients resulting from the WebCT merger
- Current deferred revenues increased 57% to $118 million from the $75 million at the end of the quarter prior year.

Current deferred revenues related to recurring products increased 64% to a total $102 million compared to $62.1 million for the same quarter prior year.

- Cash flow provided by operations, totaled $11.2 million for the fourth quarter.
- In addition to the non-recurring integration cost of $1.6 million, the company also paid $4 million for a perpetual license of a technology incorporated in one of its products and incurred capital expenditures of $1.9 million.
- The company successfully completed the integration of WebCT and it had great success in expanding existing and establishing new relationships with a wide range of different institution.

Following the merger with WebCT, the firm established a large footprint across US higher education institutions, which it will continue to expand.

- The company highlighted that the greatest near term revenue opportunity will be driven by its ability to expand existing relationships through up-selling and cross-selling, which would be its focus for the higher education market in 2007.
- As per contract value, the company finished the quarter with an annualized contract value of $163 million, an increase of 59% on a standalone basis and 19% on a pro forma basis, reflecting the strong license sales.
- Total head count was 765 people; 156 people in sales, 61 in marketing and business development, 146 in product development, 146 in support ASP hosting and production, 136 in professional services and 120 in operation.

Business Highlights:

- Victor Valley Community College in California upgraded the Blackboard Learning System Enterprise License, and the University of Northern Alabama upgraded from the basic learning system to the enterprise Blackboard Learning System Vista License.
- The most significant expansion deal was the North Carolina Community College System, which adopted the Enterprise Blackboard Learning System for nearly 60 campuses in the state
- The firm had several new clients including Aiken Technical College, a public two-year college in South Carolina, which license the enterprise Blackboard Learning System to serve more than 13,400 students enrolled in both credit and non-credit courses each year.