Company Generates Positive Cash Flow and Reaches EBITDA Profitability

Washington, D.C. – November 4, 2002 – Blackboard Inc., a leading enterprise software company for e-Education, announced record revenue for the third quarter ended September 30, 2002. Blackboard Inc. is a privately held company.

In the third quarter ended September 30, 2002, Blackboard’s total revenues were $19.0 million, representing 38% growth from third quarter 2001 revenues of $13.8 million. The third quarter performance also represents 16% sequential growth over second quarter 2002 revenues of $16.4 million. Blackboard’s third quarter 2002 product revenue accounted for approximately $16.2 million, or 85% of total revenue, while services revenue was $2.8 million, or 15% of total revenue.

Blackboard's third quarter 2002 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was positive $1.0 million, compared to negative EBITDA of $5.5 million for the same period last year. Additionally, Blackboard ended the third quarter of 2002 with $16.0 million in cash and cash equivalents and generated $3.2 million in positive cash flow for the quarter. As of September 30, 2002, Blackboard’s deferred revenue balance was $38.3 million.

“We are excited to have recently celebrated Blackboard’s fifth anniversary this quarter and achieved the important milestones of both positive cash flow and EBITDA profitability,” said Michael Chasen, CEO of Blackboard. “We owe our continued success to our clients and partners and are committed to investing our financial success in their ongoing development with the e-Education industry’s leading products and services.”

During the third quarter of 2002, Blackboard’s client base grew substantially across its core markets. Blackboard added 179 new licensees of at least one of the three major systems in the Blackboard e-Education Suite™ during the quarter. Blackboard added 88 new licensees in the Blackboard U.S. Higher Education Market Group, 70 new licensees in the Blackboard International Market Group and 21 new licensees in the Blackboard Emerging Markets Group (K-12, corporate and government).

“We are very pleased to have achieved positive cash flow and EBITDA profitability in the third quarter, slightly ahead of our targeted goals,” said Peter Repetti, CFO of Blackboard. “At a time.of general retrenchment in the industry, Blackboard’s proven and now profitable business model ensures that we are poised for continued growth and investment in client success.”

Key Highlights from the Third Quarter 2002

Key client wins across Blackboard’s primary markets:

• U.S. Higher Education Market Group: Chapman University, Mesa Community College, Stanford University – Graduate School of Business, State University of West Georgia, The College of William & Mary, Tuskegee University, University of Alabama at Birmingham – Medical Center and the University of Arkansas – Little Rock.

• International Market Group: Confederale Universiteit Antwerpen (Belgium), Universidad Nacional de Costa Rica (Costa Rica), United Arab Emirates University (UAE) and the University of Wales, Swansea (Wales). Additionally, Blackboard and SURFdiensten reached a nationwide agreement to provide the Blackboard Learning System™ and the Blackboard Community Portal System™ to Higher Education institutions throughout the Netherlands.

• Emerging Markets Group: In the K-12 Market, new Blackboard clients included Dedham Public Schools, Idaho Distance Learning Academy, Irving ISD and Sarasota Public Schools. Blackboard’s new corporate and government clients included Chancellor Beacon Academies, Education America, Judicial Council of California, Pacific Resources for Education and Learning and Texas Instruments.

Blackboard announced the general availability of two major new releases in its
Blackboard e-Education Suite - Release 6 of the Blackboard Learning System TM and Blackboard Community Portal System TM. The third system in the Blackboard suite, the Blackboard Transaction System TM, was upgraded earlier in the year.

Blackboard launched the Blackboard Learning System ML™ – the multi-language edit ion of its award winning course management system. The system is now available in Chinese, French, German, Japanese, Portuguese and Spanish.

The Blackboard Building Blocks Program™ continued to attract a significant number of cademic and corporate partners developing third party applications for the Blackboard -Education Suite. The following academic institutions joined the Building Blocks Program as developers in the third quarter: Brigham Young University, Freie Universitaet – Berlin, Hamilton College, Learning Lab of Lower Saxony, Singapore Polytechnic, University of Amsterdam and the University of Oldenburg. The following corporate partners joined the Building Blocks Program in the third quarter: Akiva, AOI Systems, Cyracle, Edgenics, Granada Learning, Softchalk and TimeCruiser.

Blackboard launched the Blackboard Certified Education Center™ (CEC) Program. The CEC Program is designed to meet the growing training needs of Blackboard clients across the United States and throughout the world. Inaugural members of the program include: California State University at Hayward, Embry-Riddle Aeronautical University, Lancaster-Lebanon Intermediate Unit 13 and University of Indianapolis.

About Blackboard Inc.
Blackboard Inc. was founded with a vision to transform the Internet into a powerful environment for the education experience. Blackboard is a leading provider of e-Education solutions serving the global needs of primary and secondary schools, higher education, corporations and government agencies. Blackboard is headquartered in.Washington, D.C., with offices and staff across North America, Europe and Asia. Please visit www.blackboard.com for more information.
 

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