Prospectus Summary
Because this is only a summary, it does not contain all the information that may be important to you. You should read the entire prospectus, especially “Risk Factors” and our financial statements and the related notes included in this prospectus, before deciding to invest in shares of our common stock. In this prospectus, “the company”, “Blackboard”, “we”, “us” and “our” refer to Blackboard Inc. and our subsidiaries.
Blackboard Inc.
We are a leading provider of enterprise software applications and related services to the education industry. Our product line consists of five software applications bundled in two suites, the Blackboard Academic Suite and the Blackboard Commerce Suite. We license these products on a renewable basis, typically for an annual term. Our clients include colleges, universities, schools and other education providers, as well as textbook publishers and student-focused merchants who serve these education providers and their students. These clients use our software to integrate technology into the education experience and campus life, and to support activities such as a professor assigning digital materials on a class website; a student collaborating with peers or completing research online; an administrator managing a departmental website; or a merchant conducting cash-free transactions with students and faculty through pre-funded debit accounts. For the year ended December 31, 2003, our total revenues were $92.5 million.
Our primary market is the U.S. postsecondary education market. We also serve the international postsecondary education market and the U.S. elementary and secondary, or K-12, education market. As of December 31, 2003, more than 2,000 clients, in 35 countries, held more than 2,600 licenses of our software. During 2003, our clients renewed or upgraded 91% of the renewable licenses eligible to be renewed during that period. Representative clients include Dallas County Community College, Fairfax County (Virginia) Public Schools, Harvard Law School, Louisiana State University, Pearson Education, Inc., Princeton University, Sylvan Learning Systems, Inc. and Templeton College at University of Oxford.
Blackboard was founded in 1997 to provide consulting services to the IMS Global Learning Consortium, originally a consortium of universities formed to develop technical standards for online learning applications. We released our first software product, an online learning application developed at Cornell University, in 1998. Our online learning application, the Blackboard Learning System, was the most widely adopted course management system among U.S. postsecondary institutions that use products of this type, according to studies in 2003 by EDUCAUSE, a non-profit membership organization focused on information technology in education, and Market Data Retrieval, a Dun & Bradstreet company, an independent market research firm known as MDR. In addition, a 2003 survey by the Universities and Colleges Information Systems Association and the Joint Information Systems Committee, organizations representing higher education institutions in the United Kingdom, reported that the Blackboard Learning System is the most widely used third-party online learning application among higher education institutions in the United Kingdom. We have also expanded our product line to include four additional software applications, addressing a broad range of our clients’ needs. We believe our history in the U.S. postsecondary education market provides us with industry experience and knowledge, which we have used to expand our product line to better serve our clients as their needs evolve.
We estimate that approximately 12 million students, faculty and other individuals actively used our products in 2003. Through this interaction, many of these individuals were exposed to the Bb logo, which we include on all of our products, and the Blackboard brand, which many of our clients use as the general label for the services they provide based on our products. We believe that the widespread adoption of our products in the education industry benefits educational publishers, third-party application developers and student-focused merchants who seek to integrate their products and services with our software applications to reach the end-users of our products. As of December 31, 2003, 16 education publishers had developed more than 2,500 digital course supplements that are designed for delivery through our products, and more than 190 clients and independent software vendors had joined our Blackboard Building Blocks program to create third-party applications that extend the functionality of our products. Based on data provided by some of our clients, we estimate that our clients used our products to process more than $750 million in payments by their students both on- and off-campus in 2003. In addition, more than 600 local independent off-campus merchants used our transaction systems to process student commerce charges.
link1 "Our Markets"Our Markets
We believe that the global education industry is large, complex and changing rapidly, due in part to the accelerating adoption of information technology. According to the U.S. Department of Education, overall annual spending on education in the United States, including postsecondary and K-12 education, was $745 billion in the 2001–2002 school year. In addition, Gartner, Inc., an independent market research firm, estimates that worldwide spending on hardware, internal services, information technology services and software in the education industry was $34.0 billion in 2003.
Colleges, universities, schools and other education providers in the United States and many other countries face several challenges as they seek to take advantage of the potential of the Internet for providing education services. These institutions are under increasing pressure to accommodate the rising number of students and working adults seeking education and to provide more flexible and efficient methods of delivering education services. In response, we believe that many institutions are seeking to utilize technology and Internet-based applications to improve learning, flexibility and their overall competitiveness in attracting and serving technology-oriented students. One such application is online distance learning. Eduventures, Inc., an education consulting and research firm, estimates that 350,000 students, or slightly less than 2% of the total postsecondary student population, were enrolled in online distance learning programs in 2002 and that this market will grow from $2.5 billion in the 2002-2003 school year to more than $4.2 billion in the 2004-2005 school year, representing a compound annual growth rate of 31%.
Our Products and Services
We typically license our individual software applications either on a stand-alone basis or bundled as part of the Blackboard Academic Suite or the Blackboard Commerce Suite. We offer the Blackboard Academic Suite in all of our markets and currently offer the Blackboard Commerce Suite in the United States and Canadian postsecondary markets. Our software products can be installed locally at a client site or hosted centrally in our data centers. In addition to our products, we provide a variety of technical support and professional services, such as training and integration.
The Blackboard Academic Suite includes the Blackboard Learning System, the Blackboard Portal System and the Blackboard Content System.
The Blackboard Commerce Suite includes the Blackboard Transaction System, the Blackboard Portal System and Blackboard One.
link1 "Our Competitive Strengths"Our Competitive Strengths
We believe that the following competitive strengths will continue to enhance our leadership position and contribute to our growth in the future.
Blackboard Building Blocks architecture, which allows institutions to download, install and manage third-party extensions. link1 "Our Growth Strategy"Our Growth Strategy
We seek to be the leading provider of enterprise software applications to the education industry by supporting several significant aspects of education, including teaching, learning, commerce and campus life. Key elements of our growth strategy include:
Our principal executive offices are located at 1899 L Street, N.W., 5th Floor, Washington, DC 20036 and our telephone number is (202) 463-4860. We were formed initially as a Delaware limited liability company in June 1997, and reincorporated as a Delaware corporation in January 1998. Our Web address is www.blackboard.com. We do not intend the information on our website to constitute part of this prospectus.
The Offering
Except as otherwise indicated, the number of shares to be outstanding after the offering throughout this prospectus is based on the number of shares outstanding on March 1, 2004, and:
The number of shares to be outstanding after this offering excludes:
Summary Consolidated Financial Data
The following tables set forth a summary of the financial data for our business. This information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this prospectus.
The following table sets forth a summary of our balance sheet data: