We are a leading provider of enterprise software applications and related services to the education industry. Our 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; a superintendant sending mass communications via voice, email and text messages to parents and students; or a merchant conducting cash-free transactions with students and faculty through pre-funded debit accounts. Our clients include colleges, universities, schools and other education providers, textbook publishers, student-focused merchants, and corporate and government clients.
Our various software applications are delivered in our four product lines, Blackboard Learntm, Blackboard Transacttm, Blackboard Connecttm, and Blackboard Mobiletm. We license these products on a renewable basis, typically for annual terms.
We began operations in 1997 as a limited liability company organized under the laws of the state of Delaware and served as a primary contractor to an education industry technical standards organization. In 1998, we incorporated under the laws of the state of Delaware and acquired CourseInfo LLC, which had developed an internal online learning system used by faculty at Cornell University, and had begun marketing its technology to universities and school districts in the United States and Canada. Since the time of our acquisition of CourseInfo, we have grown from approximately 26 licenses of one software application as of December 31, 1998 to more than 8,200 licenses of our software applications as of December 31, 2009.
In June 2007, we issued and sold $165.0 million aggregate principal amount of 3.25% convertible senior notes due 2027 in a public offering, which we refer to in this report as the Notes.
We have grown through internal growth and strategic acquisitions. In January 2008, we acquired The NTI Group, Inc. for a purchase price of $132.1 million in cash and $52.7 million in our common stock, which equated to approximately 1.5 million shares of our common stock. In connection with the transaction, we paid a portion of the purchase price using proceeds from the issuance of the Notes. The NTI Group, Inc., now a subsidiary of our company, has since been renamed Blackboard Connect Inc. This acquisition allowed us to offer clients the ability to send mass communications via voice, email and text messages. We acquired the technology underlying our Blackboard Connect service, which we began offering in February 2008, through the acquisition of The NTI Group, Inc.
In May 2009, we acquired ANGEL Learning, Inc., a leading developer of e-learning software to the U.S. education industry which we refer to in this report as ANGEL, for merger consideration of $101.3 million, which included $87.4 million in cash and $13.9 million in shares of our common stock, or approximately 0.5 million shares of common stock. The effective cash portion of the purchase price of ANGEL before transaction costs was approximately $80.8 million, net of ANGEL’s closing cash balance of approximately $6.6 million. We believe the merger with ANGEL supports our long-term strategic direction and the demands for innovative technology in the education industry and will help us create a stronger, more flexible supporter of teaching, learning and student engagement and will accelerate the pace of innovation and interoperability in e-learning.
In July, 2009, we acquired the business assets of Terriblyclever Design, LLC. This acquisition was the foundation for our newest platform, Blackboard Mobile. Blackboard Mobile allows us to offer our clients a comprehensive suite of mobile Web applications for education and enables educational institutions to deliver education and campus life services and content to mobile devices to connect students, parents, faculty, prospective students and alumni to the campus experience.
Our customer base consists primarily of U.S. postsecondary education clients, which accounted for approximately 52.1% of our total revenues for 2009. We also sell our products and services to international postsecondary clients, which accounted for approximately 15.8% of our total revenues for 2009, U.S. K-12 education clients, which accounted for approximately 15.0% of our total revenues for 2009, and others, including primarily education publishers, commercial education providers, U.S. government organizations and corporations, which accounted for approximately 17.1% of our total revenues for 2009.
Products and Services
We offer a comprehensive line of enterprise software applications focused on the education industry. Clients can license our software applications individually or on one of four platforms: Blackboard Learntm; Blackboard Transact tm; Blackboard Connecttm; and Blackboard Mobiletm.
Blackboard Learntm, our web-based teaching and learning platform, is the new version of the widely deployed Blackboard Academic Suitetm. We launched Blackboard Learntm, Release 9.0, our latest software release, in January 2009 as part of our multi-year, multi-release plan to deliver the next generation of Blackboard solutions, and it is available to our existing clients under their current licenses with us. Clients on the Blackboard Learn platform may license packages featuring combinations of the following modules: Course Delivery, Community Engagement, Content Management, Portfolio Management, and Outcomes Assessment.
Blackboard Learn provides a scalable and easy-to-use technology platform for delivering education online, managing digital content and aggregating access to tools, information and content through an integrated Web portal environment. It enables our client institutions to:
• Increase faculty adoption of technology for teaching,
• Drive student engagement through personalized experiences and active learning tools,
• Securely share and collaborate around content across the institution, and
• Meet diverse assessment needs of institutions.
Blackboard Transact is the successor to the Blackboard Commerce Suite, and can be used for on- and off-campus commerce management, online e-commerce and payment management, meal plan administration, vending, laundry services, copy and print management and student and staff identification, as well as offering security management capabilities such as access control and video surveillance technology.
Blackboard Transact, Release 3 and Blackboard Transact, Release 3.5.
Blackboard Transact is a centralized software application providing in one platform all the campus commerce and security management features that are licensed as separate parts of the Blackboard Transaction System. We license our campus commerce software, along with various hardware devices, to allow clients to establish an integrated student closed-loop debit account program for charging incidental expenses such as meals and academic materials, typically using the campus ID card. The hardware that we sell as part of the Blackboard Transact commerce management solution includes servers, ID/stored-value cards, card readers and point-of-sale devices. Blackboard Transact, Release 3 supports activities such as facilities access and identity verification, and the latest release, Blackboard Transact, Release 3.5, provides enhanced data and payment security features, additional reporting and commerce management capabilities.
Blackboard Transact — BbOne
BbOne is the brand name of our off-campus commerce management solution within the Blackboard Transact platform. It enables students and faculty to use their university ID cards as a form of payment off-campus. We recruit local and national-brand merchants to accept student debit accounts as a form of payment, facilitate authorization of each transaction, and manage the post-transaction settlement to the merchant on a daily basis. By utilizing the existing Blackboard Transact closed-loop debit account at the university, BbOne provides students with a secure, cashless and convenient way to make purchases while assuring parents that their funds will be spent within a university-approved merchant network. We develop the off-campus merchant network on behalf of each university and manage the program, from merchant acquisition and funds settlement to transaction terminal support. We also provide customized marketing campaigns designed to build the card program brand and increase deposits into the accounts.
Blackboard Connect provides comprehensive communication systems that enable rapid dissemination of critical information via voice and text devices. The Blackboard Connect family includes offerings specifically designed for education, municipal, government and military clients. Blackboard Connect is a fully hosted, web-based application that enables clients to record, schedule, send and track personalized voice messages, e-mail, SMS or text messages to tens of thousands of constituents in minutes. Blackboard Connect provides a bundled set of mass notification, survey and community outreach tools through a service that eliminates the need for clients to purchase or deploy equipment, hardware or software, or to incur long distance phone charges.
Blackboard Mobile includes Mobile Central, formerly known as MobilEdutm, which we acquired from our acquisition of Terriblyclever in 2009. Mobile Central is a mobile-based set of applications that provide student services and campus information to an institution’s end-users, including students, faculty, community constituents and alumni, on their mobile devices.
The Mobile Central applications are customized on behalf of an institution and deployed as a single mobile application, branded with that institution’s logo and images. Mobile Central is available as a native application for the Apple® iPhone® or iPod Touch® and for certain Blackberry® devices. Additionally, Mobile Central is also available in Mobile Web form, allowing other mobile, web-enabled devices to access the same information.
Our professional services support the implementation and maintenance of our systems and software in the educational environment in order to help clients maximize the value of our various enterprise software applications. Our services group offers:
• project management;
• integration of our applications with existing campus systems;
• user interface customization;
• installation and configuration;
• training and instructional design;
• course and content migration;
• custom Blackboard Building Blocks and Blackboard PowerLinks application development; and
• functional consulting relating to on-line learning and associated business processes.