Part of the Fool's mission is to continue to update investors on the companies they're interested in. As part of that mission to educate, we bring you this series of "Revisited," where we go back to recent SEC filings to dig in deep so you don't have to.
Blackboard
Blackboard's extensive product line allows for big cross-sale opportunities. That's no easy feat, but the company's sales force knows how to pull it off. It's also a testament to Blackboard's engineers, whose software creations are built to work with diverse modules. The company also thrives on renewals of existing customer accounts. It's maintained a 91% renewal rate for the past two years.
Blackboard had another strong year in 2006. Total revenues surged 34.9% to $183.1 million. A net loss of $10.7 million, or $0.39 per share, stemmed largely from one-time expenses for merger integration and debt repayments.
Diving deeper into the 10-K, you notice that Blackboard demonstrated abundant mojo in growing license revenues. Product revenue for the Blackboard Academic Suite increased by 43.4%, to $27.4 million. This is important, because license revenues often lead to ongoing maintenance fees, and perhaps cross-sale opportunities.
The $178.3 million acquisition of WebCT provided another growth driver. By mid-2007, Blackboard should have fully combined its technologies with WebCT's, creating even more cross-sale opportunities.
Blackboard is also finding growth outside the U.S., expanding international sales 58.4% to $34.7 million last year. The company has translated its software into Spanish, Italian, Dutch, German, French, Japanese, Arabic, and Chinese.
Expect Blackboard to maintain its growth momentum into 2007. Blackboard forecasts first-quarter revenue of $53 million to $54.2 million, and Q1 net income of $0.04 to $0.06 per share. Keep in mind that the company is seasonal, with its main growth quarters in Q2 and Q3.
This is not just a short-term growth spurt. It's a good bet that more and more prospective students will get their education in digital classrooms. A recent Eduventures study forecasts online enrollments of 1.8 million this year, for a total market opportunity of roughly $7 billion.
A variety of technology vendors are trying to get a piece of that pie, including eCollege.com
I've used the Blackboard system myself while teaching an economics course for UCLA. I found the system powerful and easy to use, and I've talked to other instructors and administrators who are also fans.
Blackboard realizes that universities rely on references and feedback from faculty, students, and even other institutions. Earning a good reputation can be long and difficult, but that trust is crucial to success, and Blackboard has built up valuable goodwill over the years.
Not content to rest on its laurels, the company continues to launch new products. Its Blackboard Outcome System provides a sophisticated management system to assess the progress of student populations -- a critical tool for schools that want to maintain their accreditation.
Investors seem to have paid attention. Blackboard's stock price increased from $26 to $33 since October. With the integration of WebCT complete, and continued cross-selling expected, it looks to me like the company can chalk up another good year in 2007 -- and an even busier schedule for its engineers.
Learn from further Foolishness:
Discover more superior small-cap selections with a free 30-day trial subscription to Motley Fool Hidden Gems.
Fool contributor Tom Taulli, author of The Complete M&A Handbook, holds no financial position in any companies listed above. The Fool has a disclosure policy.
