- The Washington Times - Monday, May 23, 2005

Earnings and stock price are both on the rise for Blackboard Inc. as the company makes inroads into the educational-software market.

The Washington company this month reported that first-quarter net income soared nearly sixfold compared to the same period a year earlier.

Net income jumped to $5.4 million (20 cents per share) in its first quarter ended March 31 compared with net income of $786,000 (6 cents) a year earlier. Revenue rose 23 percent to $30.9 million.

The company recently raised its earnings forecast for 2005 to between $22 million and $23 million, or 78 cents to 81 cents per share, on annual revenue of between $132.5 million and $134 million.

Blackboard’s shares fell 7 cents yesterday to close at $18.78 on the Nasdaq Stock Market.

Blackboard’s stock has risen 19 percent since the beginning of the year.

Analysts say Blackboard already is the leader in education software and is well-positioned to cash in on a trend toward software-based education.

Educational software “is something that professors and students are insisting on,” said Trace Urdan, research analyst for the Robert. W. Baird financial services firm.

Blackboard’s software helps teachers manage courses and helps students advance through specific subjects.

Mathematics software, for example, presents students with problems to solve and gives examples to guide them. If they solve a problem correctly, the software moves to a more advanced level. If they answer incorrectly, the program automatically adjusts and provides an easier problem.

Mr. Urdan believes Blackboard could increase its business by gaining more widespread use in U.S. schools, establishing new markets overseas and increasing software licensing.

The company held commercial licenses with a contract value of $88 million by the end of the first quarter. Its 3,073 licenses were worth an average of $28,600 each.

“I’m looking for something like a 20 percent top-line growth [in Blackboard’s earnings] over the next several years,” Mr. Urdan said.

However, the company will be challenged to continue introducing new products as the market for educational software becomes more saturated, he said.

Banc of America Securities warned in a research report that Blackboard’s competition could get tougher as more educational-software companies enter the market.

“The competitive landscape is extremely dynamic with the ebb and flow of product rollouts by other small companies, the specter of increasing involvement by larger software companies and the increasing presence” of software produced by universities, the Banc of America Securities report said.

Although Blackboard focuses on universities, it is expanding the software it offers for the kindergarten through high school market. The company also offers educational consulting and Web hosting services.

Its 2,200 clients include major universities in the United States as well as in Australia, China, France, Germany and Britain.

U.S. clients include American University, Georgetown University, George Washington University, Gallaudet University and Fairfax County Public Schools.

“Blackboard has pioneered the industry right alongside our clients,” said Michael Stanton, Blackboard’s director of investor relations.

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