BLACKBOARD INC.

ABOUT Blackboard Inc.

Blackboard Inc. (NASDAQ: BBBB) is a leading provider of enterprise software and services to the education industry. The Company’s product line consists of
five software applications bundled in two suites, the Blackboard Academic Suite™ and the Blackboard Commerce Suite™. Blackboard’s clients include colleges,
universities, schools and other education providers, as well as textbook publishers and student-focused merchants that serve education providers and their students.
Blackboard is headquartered in Washington, DC, with offices and staff in North America, Europe and Asia.

FINANCIAL Highlights
($ in millions)

Year Ended December 31, 2002 2003 2004

Revenues
Product $ 62.4 $83.3 $ 98.6
Professional Services 7.5 9.2 12.8

Total Revenues $ 69.9 $92.5 $111.4

Operating Expenses
Cost of Product Revenues $ 21.5 $23.1 $ 25.9
Cost of Professional Services Revenues 5.7 6.6 8.0
Research and Development 10.3 11.4 13.7
Sales and Marketing 24.2 30.9 35.2
General and Administrative 16.5 14.7 14.9
Amortization of Intangibles Resulting from Acquisitions 5.5 5.8 3.5
Stock-Based Compensation 0.5 0.3 0.2

Total Operating Expenses $ 84.2 $92.8 $101.4

(Loss) Income from Operations $(14.2) $ (0.3) $ 10.0
Net (Loss) Income (1) $(41.7) $ (1.4) $ 10.0
Net Cash Provided by Operating Activities $ 1.4 $ 19.7 $ 32.7
(1) Includes $26.6 million for the cumulative effect of change in accounting principle in 2002.

$111.4
2004 total revenues

TOTAL REVENUES
($ in millions)
million

’02 $69.9

’03 $92.5

’04 $111.4

CASH FLOW FROM OPERATIONS

$32.7
2004 cash flow from operations ($ in millions)

’02 $1.4

’03 $19.7
million
’04 $32.7
TO OUR FELLOW Shareholders
2004 was a milestone year for Blackboard. We are pleased to share a few words to
highlight our accomplishments, thank those responsible and, most importantly,
outline the critical elements of our growth strategy that will drive Blackboard
to new heights in 2005. We founded Blackboard with the vision of transforming
the Internet into a powerful environment for teaching and learning. And
while we still have a long way to go, 2004 brought great progress towards that
important goal.
Driving Shareholder Value Through Client Success…
When we speak of a milestone year in 2004, we do so across a number of the
strategic objectives that drive Blackboard’s growth strategy. Our strategy can
be thought of most simply as continuing to establish Blackboard as a leading
technology platform for the global education industry, and the consequent
weaving of our applications into the fabric of our clients’ teaching, learning
and commerce activities.
Our progress in 2004 towards this end has been noteworthy:
1. Our core U.S. higher education license count grew by 15% over 2003.
2. We demonstrated the opportunities that lie beyond the U.S. higher education
market, by having stronger than expected growth in the U.S. K–12 and
international markets.
3. We grew the average number of licenses a client runs and our average contract
value per client, confirming the value of our broader suites of solutions and
the strength of our client relationships.
4. We achieved 92% renewal rates, exceeding our own expectations and validating
the value of Blackboard solutions to our clients.
5. We made significant progress expanding the client base of our two newest
applications—Blackboard Content System™ and BbOne . ® Our future depends on making the client experience with Blackboard the best
6. We saw our first joint venture, the Chinese eLearning company Cerbibo,
build a strong foothold in a fast-growing market.
What do these strategic milestones mean for increasing shareholder value? Our
financial performance for 2004 provides the answer. For the full year 2004, we
generated revenues of $111.4 million, a 20% increase over 2003, and earnings
per diluted share of $0.21, a 110% increase over 2003. We expanded our gross
margins to a Company record of 70% while investing $13.7 million in product
development. Blackboard again generated significant cash, ending the year with
cash flow from operations of $32.7 million, a 66% increase compared to 2003 cash
flow from operations of $19.7 million. We are proud of these accomplishments
and expect to build on our success in 2005.
The Blackboard Community of Practice…
There is no question as to who deserves our sincere appreciation for accomplishing
the milestones listed above. The concept of a “Community of Practice” is an
important one for Blackboard. Our combination of over 2,200 clients, millions
of end users, 420 independent software vendors (ISVs), leading education-
publishing partners, 600 merchants, and 481 employees at the end of 2004,
positions Blackboard uniquely in the global education market. Our network—
of people, ideas and technology—is both our platform for growth and the
object of our fiduciary responsibility. We thank our clients, partners, and you, our
investors, for helping make possible our record positive financial and strategic
performance. We especially thank our hard-working and talented employees.
The Year Ahead…
As we proceed into 2005, our goals include continued revenue growth, diligent
operational cost control, and ongoing strategic investments to increase market
share in the global higher education and U.S. K–12 markets. Again, we are
focused on the following major strategic objectives:
1. Increasing the breadth of our U.S. higher education leadership position;
2. Growing the depth of our existing client relationships;
3. Expanding our leadership position in the fast-growing emerging markets of
U.S. K–12 and global higher education;
4. Retaining our clients through great products and high-quality service
and support;
5. Continuing our pace of innovation through new product introductions; and
6. Selectively considering the acquisition or license of businesses, products or
technologies that are complementary to our business and the objectives set forth.
in the industry. The Blackboard Academic Suite™ and Blackboard Commerce
Suite ™ software product lines support a broad spectrum of mission-critical
activities, including course creation and management, content management,
performance evaluation, online community development, campus transaction
processing and off-campus merchant relations, to name a few. Students, faculty
and administrators in 64 countries depend on our success.
Again, we express our thanks to you, our shareholders, for your continued support—
support that will help Blackboard to succeed and grow in 2005 and beyond.
We remain steadfastly committed to enhancing shareholder value and ensuring
the long-term success of our business through the accomplishments of our
global client base. It is our pleasure to serve you and our clients everywhere.
Matthew Pittinsky Michael Chasen
Chairman of the Board Chief Executive Officer
© 2005 Blackboard Inc. All rights reserved. Blackboard, the Blackboard logo, Blackboard Learning System, Blackboard Content System, Blackboard Community System,
Blackboard Transaction System, Blackboard Academic Suite, Blackboard Commerce Suite, Blackboard Building Blocks, and/or other Blackboard products referenced herein
are trademarks of Blackboard Inc. and may be registered in certain jurisdictions. All other trademarks and registered trademarks are the property of their respective owners.
CORPOR ATE Director y
Board of Directors Mary E. Good Legal Counsel
Senior Vice President,
Matthew L. Pittinsky Wilmer Cutler Pickering Hale
Human Resources and Facilities
Chairman and Dorr LLP
Blackboard Inc. James Hermens Washington, DC
Senior Vice President,
Michael L. Chasen
Global Services and Support Independent Registered
Chief Executive Officer and President
Blackboard Inc. Tim Hill Public Accounting Firm
Senior Vice President, Marketing Ernst & Young LLP
Frank R. Gatti
Chief Financial Officer Matthew H. Small McLean, VA
Educational Testing Service Senior Vice President, Legal,
General Counsel and Secretary Transfer Agent
Steven B. Gruber
and Registrar
Managing Partner Michael J. Beach
Oak Hill Capital Management, Inc. Vice President, Finance and Treasurer American Stock
Transfer & Trust Company
Arthur E. Levine
Corporate Headquarters 59 Maiden Lane
President and Professor of Education
New York, NY 10038
Teachers College, Columbia University Blackboard Inc. 800.937.5449
E. Rogers Novak, Jr. 1899 L Street, NW, 5th Floor www.amstock.com
Managing Member Washington, DC 20036
Novak Biddle Venture Partners Stock Listing
Investor Materials
William Raduchel Blackboard’s common stock is traded
Chairman and Chief Executive Officer For further information about on the NASDAQ Stock Market under
Ruckus Network Inc. Blackboard, additional copies the symbol “BBBB.”
of this report, Form 10-K or other
Corporate Officers financial literature contact:
Notice of Annual
Matthew L. Pittinsky Michael Stanton Meeting
Chairman Senior Director, Investor Relations
Sheraton Four Points Hotel
Blackboard Inc.
Michael L. Chasen 1201 K Street, NW
1899 L Street, NW, 5th Floor
Chief Executive Officer and President Washington, DC 20005
Washington, DC 20036
May 19, 2005, 11 a.m.
Peter Q. Repetti 202.463.4860
Chief Financial Officer You may also learn more about
George D. Calvert Blackboard by visiting the
Senior Vice President, Investor Center on our website at
Product Development investor.blackboard.com

Todd E. Gibby
Senior Vice President, Sales

Please visit us at www.blackboard.com

for more shareholder information.
BLACKBOARD INC.
HEADQUARTERS
1899 L Street, NW, 5th Floor
Washington, DC 20036
T: 202.463.4860
F: 202.463.4863
www.blackboard.com