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NIC INC
Symbol	EGOV
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NIC Earns 17 Cents Per Share in Second Quarter 2015; Solid Performance of Transaction-based Services Drives Revenue Growth

2015-08-06 16:00 ET - News Release

Company Website: http://www.egov.com
OLATHE, Kan. -- (Business Wire)

NIC Inc. (NASDAQ: EGOV), the dominant provider of official eGovernment services, today announced net income of $11.3 million and earnings per share of 17 cents on total revenues of $75.8 million for the three months ended June 30, 2015. In the second quarter of 2014, the Company reported net income of $11.0 million and earnings per share of 17 cents on total revenues of $71.2 million.

Quarterly portal revenues were $71.0 million, a 6 percent increase over the second quarter of 2014. On a same-state basis, total revenues increased 7 percent, with transaction-based revenues from Interactive Government Services (IGS) up 11 percent over the second quarter of 2014, and transaction-based revenues from Driver History Records (DHR) up 3 percent due mainly to price increases in two states. Same-state portal software development revenues increased 6 percent in the quarter due mainly to new projects in Wisconsin, Indiana, and Colorado.

Start-up costs from the pilot program with the Louisiana Department of Public Safety totaled $0.3 million during the current quarter.

NIC’s portal gross profit percentage was 40 percent in the current quarter, down from 41 percent in the second quarter of 2014, in part reflecting start-up costs from the Louisiana pilot and the expiration of the Company’s contract with the State of Delaware in the first quarter of 2015.

Software & services revenues were $4.8 million in the current quarter, up 10 percent from the second quarter of 2014, driven by an increase in transactional revenues from the federal Pre-employment Screening Program.

“I am pleased with the results NIC produced during the second quarter of 2015,” said NIC Chief Executive Officer and Chairman of the Board, Harry Herington. “Our teams continue to be focused on what drives our core business -- launching new transaction-based online government services and looking for ways to harness new innovation for the development of future services.”

Operational Highlights

Recently, three NIC subsidiaries received contract extensions. The Maryland Division of NICUSA and Kentucky Interactive, LLC received one-year contract extensions from the states of Maryland and Kentucky, respectively. In addition, the State of Utah extended its contract with Utah Interactive, LLC for three years.

Second Quarter Earnings Call and Webcast Details

On the call, the Company will discuss its 2015 second quarter, and answer questions from the investment community. The call may also include discussion of Company developments, and forward-looking and other material information about business and financial matters.

Dial-In Information

Thursday, August 6, 2015
4:30 p.m. (EDT)

Call bridge:			888-395-3227 (U.S. callers) or 719-325-2393 (international callers)
Conference ID:			5339033
Call leaders:			Harry Herington, Chief Executive Officer and Chairman of the Board
			Steve Kovzan, Chief Financial Officer
			Robert Knapp, Chief Operating Officer

Webcast Information

To sign in and listen: The Webcast system is available at https://www.egov.com/investor-relations.

A replay of the Webcast will be available by visiting https://www.egov.com/investor-relations.

About NIC

Founded in 1992, NIC (NASDAQ: EGOV) is the nation's leading provider of official government websites, online services, and secure payment processing solutions. The Company's innovative eGovernment services help make government more accessible to everyone through technology. The family of NIC companies provides eGovernment solutions for more than 3,500 federal, state, and local agencies in the United States. Forbes has named NIC as one of the “100 Best Small Companies in America” six times, most recently ranked at No. 36 (2014), and the Company has been included four times on the Barron’s 400 Index. Additional information is available at https://www.egov.com.

Cautionary Statement Regarding Forward-Looking Information

Any statements included in this release that do not relate to historical or current facts constitute forward-looking statements. These statements include estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements, including regional or national business, political, economic, competitive, social and market conditions, including the ability of the Company to renew existing contracts and sign contracts with new states and federal government agencies, as well as possible data security incidents. You should not rely on any forward-looking statement as a prediction or guarantee about the future. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” of the Company’s most recently filed Forms 10-K and 10-Q. Any forward-looking statements made during this call speak only as of the date of this call. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.


NIC INC.
FINANCIAL SUMMARY
(UNAUDITED)
Thousands except per share amounts and percentages

	Three months ended				Six months ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues:
Portal revenues	$	71,030	$	66,809	$	136,944	$	128,291
Software & services revenues		4,782		4,346		9,227		8,261
Total revenues		75,812		71,155		146,171		136,552
Operating expenses:
Cost of portal revenues, exclusive of depreciation & amortization (1)		42,815		39,549		84,309		77,110
Cost of software & services revenues, exclusive of depreciation &
amortization (1)		1,321		1,245		2,611		2,238
Selling & administrative (1)		10,818		9,841		21,356		19,049
Depreciation & amortization		2,304		2,277		4,596		4,527
Total operating expenses		57,258		52,912		112,872		102,924
Operating income before income taxes		18,554		18,243		33,299		33,628
Income tax provision		7,251		7,213		13,055		13,223
Net income	$	11,303	$	11,030	$	20,244	$	20,405

Basic net income per share	$	0.17	$	0.17	$	0.31	$	0.31
Diluted net income per share	$	0.17	$	0.17	$	0.31	$	0.31

Weighted average shares outstanding:
Basic		65,588		65,245		65,488		65,151
Diluted		65,588		65,245		65,488		65,151

Key Financial Metrics:
Revenue growth - outsourced portals		6%		8%		7%		7%
Same state revenue growth - outsourced portals		7%		8%		7%		7%
Recurring portal revenue as a % of total portal revenues		95%		95%		96%		95%
Gross profit % - outsourced portals		40%		41%		38%		40%
Revenue growth - software & services		10%		13%		12%		18%
Gross profit % - software & services		72%		71%		72%		73%
Selling & administrative expenses as a % of total revenues		14%		14%		15%		14%
Operating income as a % of total revenue		24%		26%		23%		25%

Portal Revenue Analysis:
IGS transaction-based	$	40,635	$	36,684	$	76,782	$	69,053
DMV transaction-based		25,643		25,017		51,295		48,493
Portal software development		3,477		3,288		5,772		6,315
Portal management		1,275		1,820		3,095		4,430
Total portal revenues	$	71,030	$	66,809	$	136,944	$	128,291

(1) The Company reclassified certain income statement employee benefit-related expenses for the three- and six-month periods ended June 30, 2014 to conform to the 2015 presentation. The reclassification resulted in a reduction of selling & administrative expenses of $1.0 million and $2.1 million, respectively, for the three- and six-month periods ended June 30, 2014 and corresponding increases of $1.0 million and $2.0 million, respectively, in cost of portal revenues and an increase of $0.1 million in cost of software & services revenues for the six-month period ended June 30, 2014. In addition, the reclassification resulted in a reduction of selling & administrative expenses as a percentage of total consolidated revenues of 1% and 2%, respectively, for the three- and six-month periods ended June 30, 2014 and corresponding decreases in portal gross profit percentage and a 1% decrease in software & services gross profit percentage for the six-month period ended June 30, 2014. The reclassification had no effect on total operating expenses, operating income, net income, earnings per share or cash flows.


NIC INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except par value amount


			June 30, 2015		December 31, 2014
ASSETS
	Current assets:
		Cash	$	107,411	$	87,983
		Trade accounts receivable, net		76,476		57,468
		Deferred income taxes, net		1,109		1,039
		Prepaid expenses & other current assets		11,496		11,502
		Total current assets		196,492		157,992
	Property and equipment, net			10,524		12,247
	Intangible assets, net			2,365		2,394
	Other assets			438		446
		Total assets	$	209,819	$	173,079

LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
		Accounts payable	$	55,449	$	41,402
		Accrued expenses		19,512		19,751
		Other current liabilities		2,269		2,902
		Total current liabilities		77,230		64,055

	Deferred income taxes, net			707		1,536
	Other long-term liabilities			3,965		3,350
		Total liabilities		81,902		68,941

	Commitments and contingencies			-		-

	Stockholders' equity:
		Common stock, $0.0001 par, 200,000 shares authorized,
		65,615 and 65,303 shares issued and outstanding		7		7
		Additional paid-in capital		98,168		94,690
		Retained earnings		29,742		9,441
		Total stockholders' equity		127,917		104,138
		Total liabilities and stockholders' equity	$	209,819	$	173,079


NIC INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Thousands


					Additional
	Common Stock				Paid-in
	Shares		Amount		Capital			Retained Earnings		Total
Balance, January 1, 2015	65,303		$	7	$	94,690		$	9,441	$	104,138
Net income	-			-		-			20,244		20,244
Restricted stock vestings	332			-		74			-		74
Dividend equivalents cancelled upon forfeiture of
performance-based restricted stock awards	-			-		18			57		75
Shares surrendered and cancelled upon vesting of restricted
stock to satisfy tax withholdings	(95	)		-		(1,624	)		-		(1,624	)
Stock-based compensation	-			-		3,796			-		3,796
Tax deductions relating to stock-based compensation	-			-		232			-		232
Shares issuable in lieu of dividend payments on unvested
performance-based restricted stock awards	-			-		(149	)		-		(149	)
Issuance of common stock under employee stock purchase plan	75			-		1,131			-		1,131
Balance, June 30, 2015	65,615		$	7	$	98,168		$	29,742	$	127,917


NIC INC.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands

		Three months ended						Six months ended
		June 30,						June 30,
		2015			2014			2015			2014

Cash flows from operating activities:
	Net income	$	11,303		$	11,030		$	20,244		$	20,405
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation & amortization		2,304			2,277			4,596			4,527
	Stock-based compensation expense		1,637			1,414			3,796			2,414
	Deferred income taxes		(1,319	)		(818	)		(2,755	)		(1,494	)
	Loss on disposal of property and equipment		2			24			29			128
	Changes in operating assets and liabilities:
	(Increase) decrease in trade accounts receivable, net		(8,654	)		404			(19,008	)		(8,393	)
	Decrease in prepaid expenses & other current assets		1,467			129			1,862			2,370
	(Increase) decrease in other assets		6			(9	)		8			(42	)
	Increase (decrease) in accounts payable		7,131			(1,282	)		14,047			6,705
	Increase (decrease) in accrued expenses		2,967			2,811			(1,993	)		(4,416	)
	Increase (decrease) in other current liabilities		(189	)		(313	)		(633	)		102
	Increase in other long-term liabilities		402			252			615			413
	Net cash provided by operating activities		17,057			15,919			20,808			22,719
Cash flows from investing activities:
	Purchases of property and equipment		(1,527	)		(1,734	)		(2,204	)		(2,653	)
	Capitalized internal use software development costs		(251	)		(332	)		(539	)		(657	)
	Net cash used in investing activities		(1,778	)		(2,066	)		(2,743	)		(3,310	)
Cash flows from financing activities:
	Proceeds from employee common stock purchases		-			-			1,131			1,107
	Tax deductions related to stock-based compensation		28			207			232			897
	Net cash provided by financing activities		28			207			1,363			2,004
Net increase in cash			15,307			14,060			19,428			21,413
Cash, beginning of period			92,104			81,598			87,983			74,245
Cash, end of period		$	107,411		$	95,658		$	107,411		$	95,658
Other cash flow information:
Non-cash investing activities:
Capital expenditures accrued but not yet paid		$	130		$	50		$	130		$	50

Cash payments:
Income taxes paid		$	6,659		$	7,305		$	13,073		$	13,837
Cash dividends on common stock previously restricted for payment of dividend		$	-		$	-		$	-		$	22,982

View source version on businesswire.com: http://www.businesswire.com/news/home/20150806005073/en/

Contacts:

NIC Inc.
Angela Davied, 913-754-7054
adavied@egov.com

Source: NIC Inc.