UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
   FORM 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934.For the quarterly period ended
    March 31, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934.    Commission file number
    000-50784
   Blackboard Inc.
 (Exact Name of Registrant as
    Specified in Its Charter)
   Delaware

52-2081178(State or Other Jurisdiction
    of

(I.R.S. EmployerIncorporation or
    Organization)

Identification No.)650 Massachusetts Avenue, N.W.
    Washington D.C.(Address of Principal
    Executive Offices)

20001(Zip
    Code)    Registrants Telephone Number, Including Area Code:
 (202) 463-4860
  þ o
  Regulation S-T o o
  Rule 12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
   Class

Outstanding at April 30, 2009Common Stock, $0.01 par value

31,656,453




---



##### 





Blackboard
    Inc.
  Quarterly
    Report on
    Form 10-Q
    For the Quarter Ended March 31, 2009
    INDEX
   
 PART I. FINANCIAL INFORMATIONItem 1.


Consolidated Financial StatementsConsolidated Balance Sheets as of
    December 31, 2008 and March 31, 2009 
    (unaudited)


1Unaudited Consolidated Statements of Operations
    for the Three Months Ended March 31, 2008 and 2009


2Unaudited Consolidated Statements of Cash Flows
    for the Three Months Ended March 31, 2008 and 2009


3Notes to Unaudited Consolidated Financial
    Statements


4Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


18Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


31Item 4.


Controls and Procedures


31PART II. OTHER INFORMATIONItem 1.


Legal Proceedings


32Item 1A.


Risk Factors


32Item 6.


Exhibits


42Signature


43     Throughout this Quarterly Report on
    Form 10-Q,
    the terms we, us, our and
    Blackboard refer to Blackboard Inc. and its
    subsidiaries.
 ii




---



##### 



PART I 
    FINANCIAL INFORMATION  Item 1.
    Consolidated
    Financial Statements  BLACKBOARD
    INC.
 CONSOLIDATED
    BALANCE SHEETS
    (In thousands, except share and per share data)  December 31,


March 31,2008


2009(As adjusted (1))


(Unaudited)Current assets:Cash and cash equivalents

$
141,746


$
136,164Short-term investments






6,586Accounts receivable, net of allowance for doubtful accounts of
    $926 and $1,215, respectively


92,529



56,455Inventories


1,783



1,961Prepaid expenses and other current assets


8,361



11,382Deferred tax asset, current portion


1,796



2,055Deferred cost of revenues


7,126



5,927Total current assets


253,341



220,530Deferred tax asset, noncurrent portion


18,897



20,494Investment in common stock warrant


1,990



1,990Restricted cash


4,249



4,169Property and equipment, net


31,950



32,678Other assets


549



1,241Goodwill


263,850



262,201Intangible assets, net


75,126



66,488Total assets

$
649,952


$
609,791Current liabilities:Accounts payable

$
2,579


$
2,652Accrued expenses


27,879



19,201Deferred rent, current portion


345



88Deferred revenues, current portion


179,238



139,868Total current liabilities


210,041



161,809Convertible senior notes, net of debt discount of $15,077 and
    $13,522, respectively


149,923



151,478Deferred rent, noncurrent portion


10,959



11,874Deferred revenues, noncurrent portion


5,554



5,340Total liabilities


376,477



330,501Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value; 5,000,000 shares
    authorized, and no shares issued or outstanding






Common stock, $0.01 par value; 200,000,000 shares
    authorized; 31,359,738 and 31,645,896 shares issued and
    outstanding, respectively


314



316Additional paid-in capital


356,683



362,533Accumulated deficit


(83,522
)


(83,559
)Total stockholders equity


273,475



279,290Total liabilities and stockholders equity

$
649,952


$
609,791       (1)
    
    On January 1, 2009, the Company adopted FASB Staff Position
    No. APB
    14-1,
    Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion (FSP APB
    14-1),
    which required adjustment of prior periods. See Note 7 of
    notes to unaudited consolidated financial statements. 1




---



##### 



BLACKBOARD
    INC.
 UNAUDITED
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except share and per share data)  Three Months EndedMarch 31,2008


2009(As adjusted (1))Revenues:Product

$
63,109


$
80,126Professional services


5,366



6,322Total revenues


68,475



86,448Operating expenses:Cost of product revenues, excludes $4,078 and $3,638 in
    amortization of acquired technology included in amortization of
    intangibles resulting from acquisitions shown below,
    respectively(2)


15,970



21,444Cost of professional services revenues(2)


4,948



4,767Research and development(2)


9,733



10,827Sales and marketing(2)


20,859



23,941General and administrative(2)


12,753



13,602Amortization of intangibles resulting from acquisitions


8,679



8,585Total operating expenses


72,942



83,166(Loss) income from operations


(4,467
)


3,282Other expense, net:Interest expense


(2,981
)


(2,891
)Interest income


890



107Other income (expense)


310



(558
)Loss before benefit for income taxes


(6,248
)


(60
)Benefit for income taxes


1,804



23Net loss

$
(4,444
)

$
(37
)Net loss per common share:Basic

$
(0.15
)

$
(0.00
)Diluted

$
(0.15
)

$
(0.00
)Weighted average number of common shares:Basic


30,247,568



31,503,578Diluted


30,247,568



31,503,578(2) Includes the following amounts related to stock-based
    compensation:Cost of product revenues

$
176


$
270Cost of professional services revenues


163



90Research and development


162



227Sales and marketing


1,416



1,582General and administrative


1,763



1,818       (1)
    
    On January 1, 2009, the Company adopted FASB Staff Position
    No. APB
    14-1,
    Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion (FSP APB
    14-1),
    which required adjustment of prior periods. See Note 7 of
    notes to unaudited consolidated financial statements. 2




---



##### 



BLACKBOARD
    INC.
 UNAUDITED
    CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Three MonthsEnded March 31,2008


2009(As adjusted (1))Cash flows from operating activitiesNet loss

$
(4,444
)

$
(37
)Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities:Deferred tax benefit


(1,671
)


(1,856
)Excess tax benefit from stock-based compensation


(563
)


(182
)Amortization of debt discount


1,595



1,555Depreciation and amortization


3,316



4,719Amortization of intangibles resulting from acquisitions


8,679



8,585Change in allowance for doubtful accounts


30



289Stock-based compensation


3,680



3,987Changes in operating assets and liabilities, net of effect of
    acquisitions:Accounts receivable


7,842



35,786Inventories


234



(178
)Prepaid expenses and other current assets


(1,018
)


(3,858
)Deferred cost of revenues


957



1,344Accounts payable


457



73Accrued expenses


(4,469
)


(6,914
)Deferred rent


1,469



658Deferred revenues


(22,149
)


(39,585
)Net cash (used in) provided by operating activities


(6,055
)


4,386Cash flows from investing activitiesAcquisitions, net of cash acquired


(131,923
)


Purchases of property and equipment


(7,944
)


(5,287
)Payments for patent enforcement costs


(635
)


(41
)Purchase of available-for-sale securities






(6,586
)Net cash used in investing activities


(140,502
)


(11,914
)Cash flows from financing activitiesReleases of letters of credit






80Excess tax benefits from stock-based compensation


563



182Proceeds from exercise of stock options


1,802



1,684Net cash provided by financing activities


2,365



1,946Net decrease in cash and cash equivalents


(144,192
)


(5,582
)Cash and cash equivalents at beginning of period


206,558



141,746Cash and cash equivalents at end of period

$
62,366


$
136,164       (1)
    
    On January 1, 2009, the Company adopted FASB Staff Position
    No. APB
    14-1,
    Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion (FSP APB
    14-1),
    which required adjustment of prior periods. See Note 7 of
    notes to unaudited consolidated financial statements. 3




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 For
    the Three Months Ended March 31, 2008 and 2009
  In these Notes to Unaudited Consolidated Financial
    Statements, the terms the Company and
    Blackboard refer to Blackboard Inc. and its
    subsidiaries
  1.
    Nature of
    Business and Organization    2.
    Basis of
    Presentation  Form 10-Q Regulation S-X.
  Form 10-K
  Principles
    of Consolidation
    Foreign
    Currency Translation
    Use of
    Estimates
    Fair
    Value Measurements
  Fair Value Measurements
 4




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. 157-2, Effective Date of FASB Statement
    No. 157
        Quoted Prices inActive Markets


Significant Other


Significantfor Identical


Observable


UnobservableAssets


Inputs


InputsMarch 31, 2009


(Level 1)


(Level 2)


(Level 3)Assets:Cash equivalents(1)

$
113,274


$
113,274


$



$
Short term investments(2)


6,586



6,586







Investment in common stock warrant


1,990







1,990



Total Assets

$
121,850


$
119,860


$
1,990


$
Liabilities:Convertible senior notes(3)

$
149,325


$
149,325


$



$
     (1)
    
    Cash equivalents consist of money market funds with original
    maturity dates of less than three months for which the fair
    value is based on quoted market prices.(2)
    
    Short-term investments consist of available-for-sale securities
    for which the fair value is determined through quoted market
    prices.(3)
    
    The fair value of the Companys convertible senior notes is
    based on the quoted market price.  Short-term
    investments
  Accounting for Certain
    Investments in Debt and Equity Securities.
 5




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Investment
    in Common Stock Warrant
  Accounting for
    Derivative Instruments and Hedging Activity.
  Income
    Taxes
    Share-Based
    Payment
  Accounting for Uncertainty in Income
    Taxes  an interpretation of FASB Statement
    No. 109 Accounting for
    Income Taxes
  Revenue
    Recognition and Deferred Revenue
  97-2, Software Revenue Recognition, SOP 98-9, Modification of
    SOP 97-2,
    Software Revenue Recognition, with Respect to Certain
    Transactions.
 6




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        00-3, Application of AICPA
    SOP 97-2
    to Arrangements That Include the Right to Use Software Stored on
    Another Entitys Hardware. set-up
  SOP 97-2. time-and-materials
  when-and-if-available SOP 97-2.
  Cost
    of Revenues and Deferred Cost of Revenues
  Blackboard Connect
 7




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Basic
    and Diluted Net Loss per Common Share
      Three Months EndedMarch 31,2008


2009(Unaudited)(In thousands, except share and per share amounts)Net loss

$
(4,444
)

$
(37
)Weighted average shares outstanding, basic


30,247,568



31,503,578Dilutive effect of:Stock options related to the purchase of common stock






Weighted average shares outstanding, diluted


30,247,568



31,503,578Basic net loss per common share

$
(0.15
)

$
(0.00
)Diluted net loss per common share

$
(0.15
)

$
(0.00
)     Stock-Based
    Compensation
    Comprehensive
    Net Loss
    Recent
    Accounting Pronouncements
  Business Combinations.
 8




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    SFAS 157-4, Determining Fair Value When the Volume and Level of
    Activity for the Asset or Liability Have Significantly Decreased
    and Identifying Transactions That Are Not Orderly (SFAS 157-4). SFAS 157-4
  SFAS 115-2, SFAS 124-2, EITF 99-20-2, Recognition and Presentation of Other-Than-Temporary
    Impairments (SFAS 115-2). Accounting for Certain
    Investments in Debt and Equity Securities Accounting for Certain Investments Held
    by Not-for-Profit Organizations No. 99-20, Recognition of Interest Income and Impairment on
    Purchased Beneficial Interests and Beneficial Interests That
    Continue to Be Held by a Transferor in Securitized Financial
    Assets SFAS 157-4. SFAS 157-4 SFAS 107-1 28-1,
  SFAS 107-1 28-1 Interim Disclosures about Fair Value of Financial
    Instruments. Disclosures about Fair Value of Financial
    Instruments SFAS 157-4 SFAS 115-2.
 9




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    NTI
    Group, Inc. Merger      Business Combinations
    4.
    Stock-Based
    Compensation  Stock
    Incentive Plans
     10




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock
    Options
    Number of


Weighted Average


AggregateShares


Price/Share


Intrinsic ValueExercisable at December 31, 2008


2,416,333


$
22.91Outstanding at December 31, 2008


4,864,260


$
27.80Granted


828,250


$
28.07Exercised


(101,158
)

$
16.65


$
1,285Cancelled


(23,632
)

$
31.45Outstanding at March 31, 2009


5,567,720


$
28.03


$
28,623Exercisable at March 31, 2009


2,532,546


$
23.80


$
22,162     Three Months Ended March 31,2008


2009Dividend yield


0
%


0
%Expected volatility


39.6
%


47.5
%Risk-free interest rate


2.8
%


1.6
%Expected life of options


4.9 years



4.9 yearsForfeiture rate


7.5
%


14.4
%   Dividend yield
  Expected volatility
  Risk-free interest rate
  Expected life of the options Share-Based
    Payment
  Forfeiture rate
 11




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Restricted
    Stock
    Number of


Weighted Average


AggregateShares


Fair Value/Share


Intrinsic ValueUnvested at December 31, 2008


70,000


$
29.25Granted


185,000



29.20Vested and issued


Cancelled


Unvested at March 31, 2009


255,000


$
29.21


$
8,094       5.
    Inventories    December 31,


March 31,2008


2009(Unaudited)(In thousands)Raw materials

$
678


$
709Work-in-process


547



485Finished goods


558



767Total inventories

$
1,783


$
1,961  12




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Goodwill
    and Intangible Assets    Weighted-AverageDecember 31,


March 31,


Amortization2008


2009


Period(Unaudited)(In thousands)


(In years)Goodwill

$
263,850


$
262,201Acquired technology

$
65,255


$
65,255



3.0Accumulated amortization


(49,199
)


(52,837
)Acquired technology, net


16,056



12,418Contracts and customer lists


94,732



94,732



4.9Accumulated amortization


(43,704
)


(48,582
)Contracts and customer lists, net


51,028



46,150Trademarks and domain names


1,016



1,016



3.0Accumulated amortization


(443
)


(512
)Trademarks and domain names, net


573



504Patents and related costs


8,198



8,306



15.1Accumulated amortization


(729
)


(890
)Patents and related costs, net


7,469



7,416Intangible assets, net

$
75,126


$
66,488       7.
    Notes
    Payable     13




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 04-8,
    The Effect of Contingently Convertible Instruments on
    Diluted Earnings per Share,
          Adoption
    of FSP APB
    14-1
  14-1, Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion 14-1). 14-1
 14




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14-1
  14-1
  14-1.
      14-1
  Three Months Ended March 31, 2008


Three Months Ended March 31, 2009Incremental








IncrementalImpact of





Before the


Impact ofAs Previously


Adoption of FSP





Impact of FSP


Adoption of FSPReported


APB 14-1


As Adjusted


APB 14-1


APB 14-1


As ReportedInterest expense

$
(1,830
)

$
(1,151
)

$
(2,981
)

$
(1,670
)

$
(1,221
)

$
(2,891
)Benefit for income taxes


1,804







1,804



23







23Net (loss) income


(3,293
)


(1,151
)


(4,444
)


1,184



(1,221
)


(37
)Net (loss) income per common share:Basic

$
(0.11
)

$
(0.04
)

$
(0.15
)

$
0.04


$
(0.04
)

$
(0.00
)Diluted

$
(0.11
)

$
(0.04
)

$
(0.15
)

$
0.04


$
(0.04
)

$
(0.00
)  15




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14-1
  December 31,


March 31,2008


2009Incremental





Balance Before


IncrementalImpact of





Incremental


Impact ofAs Previously


Adoption of FSP





Impact of FSP


Adoption of FSPReported


APB 14-1


As Adjusted


APB 14-1


APB 14-1


As ReportedPrepaid expenses and other current assets

$
8,518


$
(157
)

$
8,361


$
11,541


$
(159
)

$
11,382Deferred tax assets


28,942



(8,249
)


20,693



30,798



(8,249
)


22,549Notes payable, net of debt discount


163,172



(13,249
)


149,923



163,506



(12,028
)


151,478Additional paid-in capital


344,698



11,985



356,683



350,548



11,985



362,533Accumulated deficit


(76,380
)


(7,142
)


(83,522
)


(75,196
)


(8,363
)


(83,559
)   No. 07-5, Determining Whether an Instrument (or Embedded Feature)
    Is Indexed to an Entitys Own Stock (EITF 07-5) EITF 07-5 EITF 07-5
  8.
    Commitments
    and Contingencies    re-examination
   16




---



##### 



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      9.
    Quarterly
    Financial Information    10.
    Subsequent
    Event   17




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  This report contains forward-looking
    statements.  For this purpose, any statements
    contained herein that are not statements of historical fact may
    be deemed to be forward-looking statements. Without limiting the
    foregoing, the words believes,
    anticipates, plans, expects,
    intends and similar expressions are intended to
    identify forward-looking statements. The important factors
    discussed under the caption Risk Factors, presented
    below, could cause actual results to differ materially from
    those indicated by forward-looking statements made herein. We
    undertake no obligation to publicly update or revise any
    forward-looking statements, whether as a result of new
    information, future events or otherwise.
  General
        time-and-materials
  Blackboard Academic
    Suitetm, Blackboard Commerce
    Suitetm Blackboard
    Connecttm Blackboard Learning
    Systemtm Blackboard Community
    Systemtm Blackboard Content
    Systemtm Blackboard Outcomes
    Systemtm Blackboard Portfolio
    Systemtm Blackboard Transaction
    Systemtm One tm Blackboard
    Connecttm
    
    Blackboard
    Learntm;
    Blackboard
    Transacttm; and
    Blackboard
    Connecttm. 18




---



##### 



Blackboard
    Learn tm Blackboard Academic
    Suite tm Blackboard
    Learn tm Release 9.0 Blackboard Learn Course Delivery Community Engagement Content
    Management Portfolio Management Outcomes
    Assessment Blackboard Academic Suite
  Offered
in Blackboard Academic
Suitetm

Offered
in Blackboard
LearntmThe
Blackboard Learning
Systemtm

Course DeliverymoduleThe
Blackboard Community
Systemtm

Community EngagementmoduleThe
Blackboard Content
Systemtm

Content ManagementmoduleThe
Blackboard Portfolio
Systemtm

Portfolio ManagementmoduleThe
Blackboard Outcomes
Systemtm

Outcomes Assessmentmodule   Blackboard Commerce
    Suite tm Blackboard
    Transact tm Blackboard
    Connect tm
      Blackboard Connect
       19




---



##### 



Critical
    Accounting Policies and Estimates
      Revenue recognition. 97-2, Software Revenue Recognition, SOP 98-9, Modification of
    SOP 97-2,
    Software Revenue Recognition, with Respect to Certain
    Transactions.
     20




---



##### 



00-3, Application of AICPA
    SOP 97-2
    to Arrangements That Include the Right to Use Software Stored on
    Another Entitys Hardware. set-up
  SOP 97-2. time-and-materials
  when-and-if-available SOP 97-2.
  Allowance for doubtful accounts.
  Fair Value Measurements. Fair Value
    Measurements No. 157-2, Effective Date of FASB Statement
    No. 157
          Short-term investments. Accounting for Certain Investments in Debt and Equity
    Securities.
 21




---



##### 



Long-lived assets. Accounting for the Impairment or Disposal of Long-Lived
    Assets.
  Goodwill and intangible assets. Goodwill and
    Other Intangible Assets.
    Notes payable. 14-1, Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion 14-1). 14-1 14-1
  14-1
 22




---



##### 



14-1.
      14-1
  Three Months Ended March 31, 2008


Three Months Ended March 31, 2009Incremental








IncrementalImpact of





Before the


Impact ofAs Previously


Adoption of





Impact of FSP


Adoption ofReported


FSP APB 14-1


As Adjusted


APB 14-1


FSP APB 14-1


As ReportedInterest expense

$
(1,830
)

$
(1,151
)

$
(2,981
)

$
(1,670
)

$
(1,221
)

$
(2,891
)Benefit for income taxes


1,804







1,804



23







23Net (loss) income


(3,293
)


(1,151
)


(4,444
)


1,184



(1,221
)


(37
)Net (loss) income per common share:Basic

$
(0.11
)

$
(0.04
)

$
(0.15
)

$
0.04


$
(0.04
)

$
(0.00
)Diluted

$
(0.11
)

$
(0.04
)

$
(0.15
)

$
0.04


$
(0.04
)

$
(0.00
)   14-1
  December 31, 2008


March 31, 2009Incremental





Balance Before


IncrementalImpact of





Incremental


Impact ofAs Previously


Adoption of





Impact of FSP


Adoption ofReported


FSP APB 14-1


As Adjusted


APB 14-1


FSP APB 14-1


As ReportedPrepaid expenses and other current assets

$
8,518


$
(157
)

$
8,361


$
11,541


$
(159
)

$
11,382Deferred tax assets


28,942



(8,249
)


20,693



30,798



(8,249
)


22,549Notes payable, net of debt discount


163,172



(13,249
)


149,923



163,506



(12,028
)


151,478Additional paid-in capital


344,698



11,985



356,683



350,548



11,985



362,533Accumulated deficit


(76,380
)


(7,142
)


(83,522
)


(75,196
)


(8,363
)


(83,559
)   No. 07-5, Determining Whether an Instrument (or Embedded Feature)
    Is Indexed to an Entitys Own Stock (EITF 07-5) EITF 07-5
 23




---



##### 



EITF 07-5
  Income Taxes.
    Accounting for Uncertainty in Income Taxes 
    an interpretation of FASB Statement No. 109 Accounting for Income
    Taxes
  Stock-Based Compensation. Share-Based
    Payment
  Recent Accounting Pronouncements. Business
    Combinations.
  SFAS 157-4, Determining Fair Value When the Volume and Level of
    Activity for the Asset or Liability Have Significantly Decreased
    and Identifying Transactions That Are Not Orderly (SFAS 157-4). SFAS 157-4
 24




---



##### 



SFAS 115-2, SFAS 124-2, EITF 99-20-2, Recognition and Presentation of Other-Than-Temporary
    Impairments (SFAS 115-2). Accounting for Certain
    Investments in Debt and Equity Securities Accounting for Certain Investments Held
    by Not-for-Profit Organizations No. 99-20, Recognition of Interest Income and Impairment on
    Purchased Beneficial Interests and Beneficial Interests That
    Continue to Be Held by a Transferor in Securitized Financial
    Assets SFAS 157-4. SFAS 157-4 SFAS 107-1 28-1,
  SFAS 107-1 28-1 Interim Disclosures about Fair Value of Financial
    Instruments. Disclosures about Fair Value of Financial
    Instruments SFAS 157-4 SFAS 115-2.
  Important
    Factors Considered by Management
        
    Recurring ratable revenues include those product revenues that
    are recognized ratably over the contract term, which is
    typically one year, and that recur each year assuming clients
    renew their contracts. These revenues include revenues from the
    licensing of all of our software products, hosting arrangements,
    subscription fees from customers accessing our on-demand
    application services and enhanced support and maintenance
    contracts related to our software products, including certain
    professional services performed by our professional services
    groups. 25




---



##### 




    Non-recurring ratable revenues include those product revenues
    that are recognized ratably over the term of the contract, which
    is typically one year, but that do not contractually recur.
    These revenues include certain hardware components of our
    Blackboard Transaction Systemproducts and certain
    third-party hardware and software sold to our clients in
    conjunction with our software licenses.
    Other revenues include those revenues that are recognized as
    earned and are not deferred to future periods. These revenues
    include professional services, the sales of BbOne,
    certain sales of licenses, as well as the supplies and
    commissions we earn from publishers related to digital course
    supplement downloads.      Results
    of Operations
    Three MonthsEndedMarch 31,2008


2009(As adjusted (1))Revenues:Product


92
%


93
%Professional services


8



7Total revenues


100



100Operating expenses:Cost of product revenues, excludes amortization of acquired
    technology included in amortization of intangibles resulting
    from acquisitions shown below


23



25Cost of professional services revenues


7



5Research and development


14



13Sales and marketing


31



28General and administrative


19



15Amortization of intangibles resulting from acquisitions


13



10Total operating expenses


107



96(Loss) income from operations


(7
)%


4
%     (1)
    
    On January 1, 2009, the Company adopted FSP APB
    14-1, which
    required adjustment of prior periods. See note 7 of Notes
    to unaudited consolidated financial statements.  Three
    Months Ended March 31, 2009 Compared to Three Months Ended
    March 31, 2008
   26




---



##### 



Three Months Ended March 31,2008


2009Professional








ProfessionalProduct


Services





Product


ServicesRevenues


Revenues


Total


Revenues


Revenues


Total(Unaudited)(In millions)Recurring ratable revenues

$
53.7


$
0.9


$
54.6


$
70.4


$
1.2


$
71.6Non-recurring ratable revenues


5.5







5.5



6.2







6.2Other revenues


3.9



4.5



8.4



3.5



5.1



8.6Total revenues

$
63.1


$
5.4


$
68.5


$
80.1


$
6.3


$
86.4   Product revenues. Blackboard Connect Blackboard Learn Blackboard Learn Blackboard
    Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn
  Blackboard Transact
  Blackboard Learn
  Professional services revenues.
 27




---



##### 



Cost of product revenues. Blackboard Connect
    Cost of professional services revenues.
  Research and development expenses.
  Sales and marketing expenses.
  General and administrative expenses.
  Net interest expense.
 28




---



##### 



Other expense.
  Benefit for income taxes.
  Liquidity
    and Capital Resources
          e-Learning
  Notes
    Payable
     29




---



##### 



EITF 04-8, The Effect of Contingently Convertible Instruments on
    Diluted Earnings per Share,
          Working
    Capital Needs
   30




---



##### 



Off-Balance
    Sheet Arrangements
    Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk.      Item 4.
    Controls
    and Procedures.  (a)
    Evaluation
    of Disclosure Controls and Procedures.  Rules 13a-15(e) 15d-15(e)
  (b)
    Changes
    in Internal Control over Financial Reporting.  Rules 13a-15(f) 15d-15(f)
 31




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##### 



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings          Item 1A.
    Risk
    Factors.  Form 10-K
  Challenging
    economic conditions may adversely affect our
    business.
   32




---



##### 



We
    could lose revenues if there are changes in the spending
    policies or budget priorities for government funding of
    colleges, universities, schools and other education
    providers.
    There
    is no assurance that our investments in product development and
    product acquisition will be successful; if our products do not
    gain market acceptance, our revenues may decrease and we may not
    realize a return on such investments.
  Blackboard Learn Blackboard Learn
  Blackboard Outcomes System Blackboard Connect Blackboard Outcomes
    System Blackboard Connect
  We
    face intense and growing competition, which could result in
    price reductions, reduced operating margins and loss of market
    share.
   33




---



##### 



Blackboard Learn Blackboard Transact Blackboard Connect and/or
    If
    potential clients or competitors use open source software to
    develop products that are competitive with our products and
    services, we may face decreased demand and pressure to reduce
    the prices for our products.
    Our
    merger with The NTI Group, Inc. (NTI) and our
    proposed merger with ANGEL Learning, Inc. (ANGEL)
    present many risks, and we may not realize the financial and
    strategic goals that were contemplated at the time of the
    transactions.
    
    we may not realize the anticipated financial benefits if we are
    unable to sell the acquired company products to our customer
    base, if a larger than predicted number of customers decline to
    renew their contracts, or if the acquired contracts do not allow
    us to recognize revenues on a timely basis; 34




---



##### 




    we may have difficulty incorporating the acquired technologies
    or products with our existing product lines and maintaining
    uniform standards, controls, procedures and policies;
    we may face contingencies related to product liability,
    intellectual property, financial disclosures, and accounting
    practices or internal controls;
    we may have higher than anticipated costs in supporting and
    continuing development of the acquired company products and in
    servicing new and existing clients of a company we acquire;
    we may not be able to retain key employees from the companies we
    acquire;
    we may be unable to manage effectively the increased size and
    complexity of the combined company, and our managements
    attention may be diverted from our ongoing business by
    transition or integration issues;
    we may lose anticipated tax benefits or have additional legal or
    tax exposures; and
    we will not be able to determine whether all or any of the
    0.4 million shares of stock consideration in the NTI merger
    that remains contingent on the achievement of certain
    performance milestones will be issued until the completion of
    the financial results for fiscal year 2009.  Our
    business strategy contemplates future business combinations and
    acquisitions which may be difficult to integrate, disrupt our
    business, dilute stockholder value or divert management
    attention.
          Our
    existing indebtedness could adversely affect our financial
    condition and we may not be able to fulfill our debt
    obligations, including the 3.25% Convertible Senior Notes
    due 2027 (the Notes).
    
    upon conversion or redemption of the Notes, we will be required
    to repay the principal amount of $165.0 million in cash;
    we will use a significant portion of our cash flow to pay
    interest on our outstanding debt, limiting the amount available
    for working capital, capital expenditures and other general
    corporate purposes; 35




---



##### 




    lenders may be unwilling to lend additional amounts to us for
    future working capital needs, additional acquisitions or other
    purposes or may only be willing to provide funding on terms we
    would consider unacceptable;
    if our cash flow were inadequate to make interest and principal
    payments on our debt, we might have to refinance our
    indebtedness or issue additional equity or other securities and
    may not be successful in those efforts or may not obtain terms
    favorable to us; and
    our ability to finance working capital needs and general
    corporate purposes for the public and private markets, as well
    as the associated cost of funding, is dependent, in part, on our
    credit ratings, which may be adversely affected if we experience
    declining revenues.    We may
    not be able to repurchase the Notes when required by the
    holders, including upon a defined fundamental change or other
    specified dates at the option of the holder, or pay cash upon
    conversion of the Notes.
    Conversion
    of the Notes may affect the market price of our common stock and
    may dilute the ownership of existing stockholders.
    Our
    reported earnings per share may be more volatile because of the
    contingent conversion provision of the Notes.
   36




---



##### 



Because
    most of our licenses are renewable on an annual basis, a
    reduction in our license renewal rate could significantly reduce
    our revenues.
      Because
    we generally recognize revenues ratably over the term of our
    contract with a client, downturns or upturns in sales will not
    be fully reflected in our operating results until future
    periods.
    Our
    operating margins may suffer if our professional services
    revenues increase in proportion to total revenues because our
    professional services revenues have lower gross
    margins.
    If our
    products contain errors, new product releases are delayed or our
    services are disrupted, we could lose new sales and be subject
    to significant liability claims.
    
    delays in or loss of market acceptance of our products;
    diversion of our resources;
    a lower rate of license renewals or upgrades;
    injury to our reputation; and
    increased service expenses or payment of damages. 37




---



##### 



The
    length and unpredictability of the sales cycle for our software
    could delay new sales and cause our revenues and cash flows for
    any given quarter to fail to meet our projections or market
    expectations.
    
    clients budgetary constraints and priorities;
    the timing of our clients budget cycles;
    the need by some clients for lengthy evaluations that often
    include both their administrators and faculties; and
    the length and timing of clients approval processes.    Our
    sales cycle with international postsecondary education providers
    and U.S. K-12 schools may be longer than our historical U.S.
    postsecondary sales cycle, which could cause us to incur greater
    costs and could reduce our operating margins.
   38




---



##### 



We may
    have exposure to greater than anticipated tax
    liabilities.
    Our
    ability to utilize our net operating loss carryforwards may be
    limited.
      The
    investment of our cash balances are subject to risks which may
    cause losses and affect the liquidity of these
    investments.
    Our
    future success depends on our ability to continue to retain and
    attract qualified employees.
    If we
    do not maintain the compatibility of our products with
    third-party applications that our clients use in conjunction
    with our products, demand for our products could
    decline.
   39




---



##### 



If we
    are unable to protect our proprietary technology and other
    rights, it will reduce our ability to compete for
    business.
    If we
    are found to infringe the proprietary rights of others, we could
    be required to redesign our products, pay significant royalties
    or enter into license agreements with third
    parties.
  Legal
    Proceedings
  
    be expensive and time consuming to defend;
    force us to stop licensing our products that incorporate the
    challenged intellectual property;
    require us to redesign our products and reimburse certain costs
    to our clients;
    divert managements attention and other company
    resources; and
    require us to enter into royalty or licensing agreements in
    order to obtain the right to use necessary technologies, which
    may not be available on terms acceptable to us, or at all.  The
    nature of our business and our reliance on intellectual property
    and other proprietary information subjects us to the risks of
    litigation.
    Expansion
    of our business internationally will subject our business to
    additional economic and operational risks that could increase
    our costs and make it difficult for us to operate
    profitably.
   40




---



##### 




    foreign currency fluctuations, which could result in reduced
    revenues and increased operating expenses;
    potentially longer payment and sales cycles;
    difficulty in collecting accounts receivable;
    the effect of applicable foreign tax structures, including tax
    rates that may be higher than tax rates in the United States or
    taxes that may be duplicative of those imposed in the United
    States;
    tariffs and trade barriers;
    general economic and political conditions in each country;
    inadequate intellectual property protection in foreign countries;
    uncertainty regarding liability for information retrieved and
    replicated in foreign countries;
    the difficulties and increased expenses of complying with a
    variety of foreign laws, regulations and trade
    standards; and
    unexpected changes in regulatory requirements.  Unauthorized
    disclosure of data, whether through breach of our computer
    systems or otherwise, could expose us to protracted and costly
    litigation or cause us to lose clients.
    Operational
    failures in our network infrastructure could disrupt our remote
    hosting services, could cause us to lose clients and sales to
    potential clients and could result in increased expenses and
    reduced revenues.
   41




---



##### 



U.S.
    and foreign government regulation of our products and services
    could cause us to incur significant expenses, and failure to
    comply with applicable regulations could make our business less
    efficient or even impossible.
    We may
    be subject to state and federal financial services regulation,
    and any violation of any present or future regulation could
    expose us to liability, force us to change our business
    practices or force us to stop selling or modify our products and
    services.
  Blackboard Transact
  
    disclosure of consumer rights and our business policies and
    practices;
    restrictions on uses and disclosures of customer information;
    error resolution procedures;
    limitations on consumers liability for unauthorized
    account activity;
    data security requirements;
    government registration; and
    reporting and documentation requirements.    Item 6.
    Exhibits.    Exhibit No.

Description31
.1

Certification of Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Chief Financial Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.  42




---



##### 



SIGNATURE    Blackboard Inc.
  By:
    /s/  Michael
    J. Beach    (On behalf of the registrant and as Principal
 Financial Officer)
   43