EX-99 3 a2121646zex-99.htm EX 99
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Exhibit 99

[NIC INC. LOGO]   3Q 2003 EARNINGS
    For Immediate Release
    Contact: Chris Neff
435-645-8898
cneff@nicusa.com


NIC Reports Third Quarter 2003 Net Income of $1.1 Million
Innovative new services drive 47% increase in same state non-DMV revenue

        OLATHE, Kan.—October 30, 2003—NIC Inc. (Nasdaq: EGOV) today reported net income of $1.1 million and earnings per share of 2 cents for the three months ended September 30, 2003, as compared to net income of $212,000 in third quarter 2002. Operating margins were 14% for the quarter, compared to 6% a year ago.

        Revenues for NIC's core outsourced portal business were $9.9 million, up 12 percent over the prior year quarter. During the same period, portal gross profit rose by 17 percent. The Company posted a 46 percent gross profit percentage for the portal business, up from 43 percent during the same period last year. Total revenues for the quarter were $12.9 million, up from $11.7 million in third quarter 2002.

        Portal revenue growth included a 47 percent increase in same state non-DMV revenue in the current quarter. Non-DMV growth for the quarter was driven primarily by the addition of more than 70 revenue-generating services and higher usage for NIC's eGovernment applications.

        "Non-DMV revenue growth is a key indicator of long-term strength in our core business," said Jeff Fraser, Chief Executive Officer of NIC. "Our 47% growth in the third quarter demonstrates how bringing innovative solutions to our government partners translates into strong results for investors."

        The financial performance of the software and services business for the third quarter also matched the Company's expectations.

        Selling and administrative expenses for the quarter were $2.9 million, down 12 percent from the same quarter last year. "We continue to be successful in driving down our overhead costs," said Harry Herington, Chief Operating Officer of NIC. "At 22 percent of revenue, selling and administrative expenses are at their lowest level since NIC went public in July 1999."

        NIC ended the third quarter with $16.3 million in cash and equivalents, up more than $300,000 from June 30, 2003. During the same period, working capital grew by $2.0 million to $22.2 million.

Third Quarter Operating Highlights

        During the third quarter, NIC signed a two-year portal contract extension with the state of Indiana and a one-year renewal agreement with the state of Tennessee. The Company's portal operations were also enhanced by the September 15 launch of a self-funded eGovernment portal for the Commonwealth of Kentucky (www.Kentucky.gov).

        This month, eight NIC partners were honored by the Center for Digital Government's 2003 Best of the Web competition for eGovernment excellence. Four of NIC's partners ranked among the top five finishers for state Web sites, including Utah (www.Utah.gov) in first place, Maine (www.Maine.gov) in second, Indiana (www.IN.gov) in third, and Arkansas (www.Arkansas.gov) in fifth place. Indianapolis/Marion County (www.CivicNet.net) ranked third in the county government category, and services for the Maine Secretary of State (www.Maine.gov/sos), Montana's Fish, Wildlife & Parks Department (www.DiscoveringMontana.com), and Iowa State County Treasurers Association (www.IowaTreasurers.org) were also recognized.

        In addition, three NIC partners were singled out in the annual eGovernment survey conducted by the Taubman Center for Public Policy at Brown University. Indiana was ranked the third best state for overall eGovernment services, while Tennessee (www.Tennessee.gov) placed fourth and Kentucky was ranked tenth.

        "We thank Indiana, Tennessee, and Kentucky for putting their trust in NIC, and we congratulate all of our government partners for their ongoing commitment to offering the best possible eGovernment services to their constituents," concluded Fraser.

Fourth Quarter Outlook

        Despite normal fourth quarter seasonality, the Company expects the portal business to drive solid fourth quarter 2003 results. Portal revenues should be comparable to third quarter 2003, as should portal gross margins, selling & administrative costs, operating income, and earnings per share. On the software & services side, revenues and gross margins are expected to decrease moderately.

Third Quarter Earnings Call and Webcast Details

Dial-In Information
Thursday, October 30, 2003
9:00 a.m. EDT
Call bridge:   1-800-240-6709
Call leaders:   Jeff Fraser, Chief Executive Officer
Eric Bur, Chief Financial Officer
Harry Herington, Chief Operating Officer

        A replay of the call will be available until 5:00 p.m. EDT on November 6 by dialing 1-800-405-2236 and using passcode 555404.

Webcast Information
October 30, 2003
9:00 a.m. EDT
To sign in and listen: The Webcast system is available at
www.nicusa.com/investor.

        Some users may need to refresh their browsers to view the Webcast information. A replay of the Webcast will be available until 5:00 p.m. EDT on December 30 by visiting www.nicusa.com/investor.

About NIC

        NIC manages more eGovernment services than any provider in the world. The company is helping governments communicate more effectively with citizens and businesses by putting essential services online. NIC provides eGovernment solutions for 1,400 state and local agencies that serve more than 71 million people in the United States. Additional company information is available at www.nicusa.com.

        The statements in this release regarding continued implementation of NIC's business model and its development of new products and services are forward-looking statements. There are a number of important factors that could cause actual results to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, the success of the Company in signing contracts with new states and government agencies, including continued favorable government legislation; NIC's ability to develop new services; existing states and agencies adopting those new services; acceptance of eGovernment services by businesses and citizens; competition; and general economic conditions and the other important cautionary statements and risk factors described in NIC's 2002 Annual Report on Form 10-K filed on March 20, 2003, with the Securities and Exchange Commission.

(financial tables follow)


NIC INC.

FINANCIAL SUMMARY

(UNAUDITED)

(Thousands except for per share amounts)

 
  Three months ended
September 30,

  Nine months ended
September 30,

 
 
  2003
  2002
  2003
  2002
 
Revenues:                          
  Portal revenues   $ 9,942   $ 8,863   $ 29,891   $ 26,351  
  Software and services revenues     2,931     2,805     8,418     10,348  
   
 
 
 
 
    Total revenues     12,873     11,668     38,309     36,699  
   
 
 
 
 
Cost of revenues:                          
  Cost of portal revenues, exclusive of depreciation and amortization     5,416     5,065     15,791     14,713  
  Cost of software and services revenues, exclusive of depreciation and amortization     2,276     2,125     6,662     12,138  
  Selling and administrative     2,852     3,255     8,909     10,831  
  Impairment loss                 4,316  
  Stock compensation                 1,307  
  Depreciation and amortization     471     567     1,413     2,433  
   
 
 
 
 
    Total operating expenses     11,015     11,012     32,775     45,738  
   
 
 
 
 
Operating income (loss)     1,858     656     5,534     (9,039 )
   
 
 
 
 
Other income (expense):                          
  Interest income     21     38     80     134  
  Interest expense     (6 )   (20 )   (15 )   (53 )
  Equity in net loss of affiliates     (41 )   (286 )   161     (968 )
  Other income (expense), net     (12 )       (12 )   (36 )
   
 
 
 
 
  Total other income (expense)     (38 )   (268 )   214     (923 )
   
 
 
 
 
Income (loss) from continuing operations before income taxes     1,820     388     5,748     (9,962 )
Income tax provision (benefit)     737     168     2,319     (3,933 )
   
 
 
 
 
Income (loss) from continuing operations     1,083     220     3,429     (6,029 )
Discontinued operations:                          
  Loss from discontinued operations (less applicable income tax benefit of $—, $5, $—, and $1,307)         (8 )       (2,036 )
   
 
 
 
 
Net income (loss)   $ 1,083   $ 212   $ 3,429   $ (8,065 )
   
 
 
 
 
Basic and diluted earnings (loss) per share:                          
  Earnings (loss) per share—continuing operations   $ 0.02   $ 0.00   $ 0.06   $ (0.11 )
   
 
 
 
 
  Loss per share—discontinued operations   $   $ (0.00 ) $   $ (0.03 )
   
 
 
 
 
  Net earnings (loss) per share   $ 0.02   $ 0.00   $ 0.06   $ (0.14 )
   
 
 
 
 
Weighted average shares outstanding:                          
  Basic     58,357     56,811     58,242     56,556  
   
 
 
 
 
  Diluted     59,402     57,006     58,742     56,556  
   
 
 
 
 
Key Financial Metrics:                          
Revenue growth—outsourced portals     12 %   14 %   13 %   36 %
Revenue growth—software and services     5 %   (3 )%   (19 )%   26 %
Gross profit %—outsourced portals     46 %   43 %   47 %   44 %
Gross profit %—software and services     22 %   24 %   21 %   (17 )%
Selling and administrative costs as a % of revenue     22 %   28 %   23 %   30 %
Operating margin %     14 %   6 %   14 %   (25 )%


NIC Inc.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

Thousands except for share amounts

 
  September 30,
2003

  December 31,
2002

 
ASSETS              
Current assets:              
  Cash and cash equivalents   $ 10,643   $ 9,559  
  Cash and cash equivalents—restricted     5,401     6,300  
  Marketable securities     250     249  
  Trade accounts receivable     17,268     14,465  
  Deferred income taxes     219     606  
  Prepaid expenses     807     761  
  Other current assets     7,744     3,215  
   
 
 
    Total current assets     42,332     35,155  
Property and equipment, net     2,862     3,054  
Deferred income taxes     33,435     35,049  
Other assets     118     139  
Investments in affiliates     698     839  
Intangible assets, net     105     220  
   
 
 
    Total assets   $ 79,550   $ 74,456  
   
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current liabilities:              
  Accounts payable   $ 13,274   $ 12,701  
  Accrued expenses     5,703     3,792  
  Note payable—current portion     154     332  
  Application development contracts     563     1,559  
  Other current liabilities     424     815  
   
 
 
    Total current liabilities     20,118     19,199  
Note payable—long-term portion     247     201  
   
 
 
    Total liabilities     20,365     19,400  
   
 
 
Commitments and contingencies          
Shareholders' equity:              
  Common stock, no par, 200,000,000 shares authorized 58,441,075 and 58,092,346 shares issued and outstanding          
  Additional paid-in capital     197,860     197,160  
  Accumulated deficit     (138,460 )   (141,889 )
   
 
 
      59,400     55,271  
  Less treasury stock     (215 )   (215 )
   
 
 
    Total shareholders' equity     59,185     55,056  
   
 
 
    Total liabilities and shareholders' equity   $ 79,550   $ 74,456  
   
 
 


NIC Inc.

CASH FLOW SUMMARY

(UNAUDITED)

Thousands

 
  Three months ended
September 30,

  Nine months ended
September 30,

 
 
  2003
  2002
  2003
  2002
 
Cash flows from operating activities:                          
  Net income (loss)   $ 1,083   $ 212   $ 3,429   $ (8,065 )
  Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                          
    Depreciation and amortization     471     567     1,413     2,824  
    Compensation expense recognized related to stock options                 1,307  
    Loss on disposal of property and equipment     12         12     1,459  
    Accretion of discount on marketable securities                 (4 )
    Application development contracts     (264 )   (2,154 )   (996 )   (858 )
    Impairment loss                 4,316  
    Deferred income taxes     628     143     2,089     (5,311 )
    Equity in net loss of affiliates     41     286     (161 )   968  
  Changes in operating assets and liabilities                          
    (Increase) in trade accounts receivable     (567 )   (442 )   (2,803 )   (2,806 )
    (Increase) in prepaid expenses     (343 )   (206 )   (46 )   (25 )
    (Increase) decrease in other current assets     (1,198 )   (638 )   (4,518 )   248  
    (Increase) decrease in other assets     7     (22 )   21     71  
    Increase (decrease) in accounts payable     (960 )   942     554     27  
    Increase (decrease) in accrued expenses     1,225     273     1,959     (595 )
    Increase (decrease) in other current liabilities     308     9     (90 )   110  
   
 
 
 
 
Net cash provided by (used in) operating activities     443     (1,030 )   863     (6,334 )
   
 
 
 
 
Cash flows from investing activities:                          
  Purchases of property and equipment     (453 )   (341 )   (1,075 )   (644 )
  Purchases of marketable securities         (404 )       (20,999 )
  Maturities of marketable securities         866         17,907  
  Investments in affiliates and joint ventures         (191 )       (191 )
   
 
 
 
 
  Net cash used in investing activities     (453 )   (70 )   (1,075 )   (3,927 )
   
 
 
 
 
Cash flows from financing activities:                          
  Decrease in cash and cash equivalents—restricted     36         899      
  Payments on notes payable     (36 )   (84 )   (132 )   (237 )
  Payments on capital lease obligation         (2 )       (8 )
  Proceeds from exercise of employee stock options     396     1,029     529     1,646  
   
 
 
 
 
  Net cash provided by financing activities     396     943     1,296     1,401  
   
 
 
 
 
Net increase (decrease) in cash and cash equivalents     386     (157 )   1,084     (8,860 )
Cash and cash equivalents, beginning of period     10,257     8,532     9,559     17,235  
   
 
 
 
 
Cash and cash equivalents, end of period   $ 10,643   $ 8,375   $ 10,643   $ 8,375  
   
 
 
 
 



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NIC Reports Third Quarter 2003 Net Income of $1.1 Million Innovative new services drive 47% increase in same state non-DMV revenue
NIC Inc. CASH FLOW SUMMARY (UNAUDITED) Thousands