EX-99 3 a2127652zex-99.htm EX 99
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EXHIBIT 99

Logo   4Q 2003 EARNINGS
For Immediate Release

Contact: Chris Neff
435-645-8898
cneff@nicusa.com


NIC Reports Record Fourth Quarter 2003 Results
as Operating Income Rises 63 Percent

        OLATHE, Kan.—January 29, 2004—NIC Inc. (Nasdaq: EGOV) today reported net income of $2.9 million and earnings per share of five cents on total revenues of $12.5 million for the three months ended December 31, 2003. During the previous year quarter, the Company posted net income of $455,000 and earnings per share of one cent on total revenues of $10.8 million. Driven by the continued strength of the core outsourced portal business, NIC's operating income rose 63 percent to $1.8 million in the fourth quarter, up from $1.1 million a year ago.

        Fourth quarter results include a non-recurring income tax adjustment of approximately $1.8 million, or three cents per share, relating primarily to the expected future utilization of certain net operating loss carryforwards. Absent this adjustment, NIC's continuing operations earned two cents per share for the quarter.

        Portal revenues were $10.3 million, a 23 percent increase over the prior year quarter, with portal gross profit rising 38 percent to $4.5 million during the same period. Portal gross profit percentage was 44 percent for fourth quarter 2003, up from 39 percent during fourth quarter 2002.

        Same state revenues for the portal business grew 13 percent in the fourth quarter, compared to a six percent increase in third quarter 2003. Same state revenues from the sale of driver histories (DMV) rose four percent over last year's fourth quarter, while same state non-DMV revenues grew 32 percent during the same period.

        "NIC's portal operations are healthier than ever, and we keep finding new ways to grow this business," said Jeff Fraser, Chief Executive Officer of NIC. "We launched 70 revenue-generating non-DMV services this quarter, and one of NIC's top priorities in 2004 is to further increase market penetration in our existing 18 state installations."

        As expected, fourth quarter results for the software and services business decreased moderately from third quarter 2003.

        Selling and administrative expenses for the quarter were $2.8 million, or 22 percent of revenue, down from 23 percent in the prior year quarter. "We did a good job of driving down expenses in 2003, and this is an area of continued focus in the new year," said Eric Bur, NIC's Chief Financial Officer.

        NIC ended the fourth quarter with $19.2 million in cash and equivalents, up $2.9 million from September 30, 2003. During the same period, net working capital grew by $2.2 million to $24.4 million.

        For the fiscal year, NIC posted operating income of $7.3 million, compared to an operating loss of $7.9 million the previous year. Portal revenues rose 16 percent to $40.2 million in 2003, with non-DMV revenues growing 35 percent for the year. Selling and administrative costs dropped 12 percent to $11.7 million for 2003, and as a percentage of revenue dipped to 23 percent from 28 percent during the prior year. The Company earned 11 cents per share in 2003 (eight cents excluding the income tax adjustment), compared to a loss per share of 13 cents in 2002.

Fourth Quarter Operating Highlights

        During the fourth quarter, Nebraska completed its competitive bid process and signed a new long-term outsourced portal services contract this month with NIC's Nebraska Interactive subsidiary. Nebraska launched its eGovernment services in 1995 and was NIC's second portal installation. The new self-funded agreement will span up to six years. During the quarter, NIC also completed a successful implementation of a unique point-of-sale hunting and fishing licensing system in cooperation with the state of Alabama and Wal-Mart Stores, Inc.

        "We thank Nebraska for their vote of confidence, and we look forward to continuing this successful relationship," continued Fraser. "In addition, we are excited about our new point-of-sale hunting and fishing system in Alabama and are eager to expand this relationship with Wal-Mart into other states."

First Quarter and Full-Year 2004 Outlook

        For first quarter 2004, NIC expects total revenues of $13.4—$13.9 million, portal revenues of $11.4—$11.6 million, and software and services revenues of $2.0—$2.3 million. The Company also anticipates operating income between $2.1—$2.3 million and net income of $1.3—$1.4 million.

        For full-year 2004, NIC is comfortable with the current First Call mean estimates: Total revenues of $54.4—$55.3 million, portal revenues of $46.6—$47.3 million, and software and services revenues of $7.8—$8.0 million. In addition, the Company expects operating income between $11.0—$11.3 million and net income of $6.5—$6.8 million.

        NIC's first quarter and full-year 2004 estimates do not include new contracts.

Fourth Quarter Earnings Call and Webcast Details

Dial-In Information

Thursday, January 29, 2004
9:00 a.m. ET
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. ET on February 5 by dialing 1-800-405-2236 and using passcode 566221.

Webcast Information

Thursday, January 29, 2004
9:00 a.m. ET
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. ET on April 29 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
December 31,

  Twelve months ended
December 31,

 
 
  2003
  2002
  2003
  2002
 
Revenues:                          
  Portal revenues   $ 10,328   $ 8,428   $ 40,209   $ 34,779  
  Software and services revenues     2,205     2,419     10,622     12,766  
   
 
 
 
 
    Total revenues     12,533     10,847     50,831     47,545  
   
 
 
 
 
Cost of revenues:                          
  Cost of portal revenues, exclusive of depreciation and amortization     5,805     5,142     21,586     19,855  
  Cost of software and services revenues, exclusive of depreciation and amortization     1,781     1,550     8,443     13,688  
  Selling and administrative     2,772     2,492     11,681     13,322  
  Impairment loss                 4,316  
  Stock compensation                 1,307  
  Depreciation and amortization     370     555     1,783     2,988  
   
 
 
 
 
    Total operating expenses     10,728     9,739     43,493     55,476  
   
 
 
 
 
Operating income (loss)     1,805     1,108     7,338     (7,931 )
   
 
 
 
 
Other income (expense):                          
  Interest income     20     46     100     180  
  Interest expense     (5 )   4     (20 )   (49 )
  Equity in net loss of affiliates     (54 )   (267 )   107     (1,235 )
  Other income (expense), net         (35 )   (12 )   (72 )
   
 
 
 
 
  Total other income (expense)     (39 )   (252 )   175     (1,176 )
   
 
 
 
 
Income (loss) from continuing operations before income taxes     1,766     856     7,513     (9,107 )
Income tax provision (benefit)     (1,134 )   401     1,185     (3,532 )
   
 
 
 
 
Income (loss) from continuing operations     2,900     455     6,328     (5,575 )
Discontinued operations:                          
  Loss from discontinued operations (less applicable income tax benefit of $—, $—, $—, and $1,307)                 (2,035 )
   
 
 
 
 
Net income (loss)   $ 2,900   $ 455   $ 6,328   $ (7,610 )
   
 
 
 
 
Basic and diluted earnings (loss) per share:                          
  Earnings (loss) per share—continuing operations   $ 0.05   $ 0.01   $ 0.11   $ (0.10 )
   
 
 
 
 
  Loss per share—discontinued operations   $   $   $   $ (0.03 )
   
 
 
 
 
  Net earnings (loss) per share   $ 0.05   $ 0.01   $ 0.11   $ (0.13 )
   
 
 
 
 
Weighted average shares outstanding:                          
  Basic     58,593     57,824     58,331     56,875  
   
 
 
 
 
  Diluted     60,847     57,860     59,269     56,875  
   
 
 
 
 
Key Financial Metrics:                          
Revenue growth—outsourced portals     23 %   20 %   16 %   32 %
Revenue growth—software and services     (9 )%       (17 )%   20 %
Gross margin—outsourced portals     44 %   39 %   46 %   43 %
Gross margin—software and services     19 %   36 %   21 %   (7 )%
Selling and administrative costs as a % of revenue     22 %   23 %   23 %   28 %
Operating margin %     14 %   10 %   14 %   (17 )%
Portal Revenue Analysis (Thousands):                          
DMV transaction-based   $ 6,617   $ 5,252   $ 25,088   $ 22,253  
Non-DMV transaction-based     2,909     2,267     10,846     8,065  
Portal management     301     290     1,200     1,274  
Software development     501     619     3,075     3,187  
   
 
 
 
 
  Total   $ 10,328   $ 8,428   $ 40,209   $ 34,779  
   
 
 
 
 


NIC Inc.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

Thousands except for share amounts

 
  December 31,
2003

  December 31,
2002

 
ASSETS              
Current assets:              
  Cash and cash equivalents   $ 13,540   $ 9,559  
  Cash and cash equivalents—restricted     5,363     6,300  
  Marketable securities     249     249  
  Trade accounts receivable     17,872     14,465  
  Deferred income taxes     181     606  
  Prepaid expenses     698     761  
  Other current assets     8,845     3,215  
   
 
 
    Total current assets     46,748     35,155  
Property and equipment, net     2,992     3,054  
Deferred income taxes     35,168     35,049  
Other assets     110     139  
Investments in affiliates     644     839  
Intangible assets, net     77     220  
   
 
 
    Total assets   $ 85,739   $ 74,456  
   
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current liabilities:              
  Accounts payable   $ 16,345   $ 12,701  
  Accrued expenses     5,245     3,792  
  Note payable—current portion     156     332  
  Application development contracts     465     1,559  
  Other current liabilities     158     815  
   
 
 
    Total current liabilities     22,369     19,199  
Note payable—long-term portion     207     201  
   
 
 
    Total liabilities     22,576     19,400  
   
 
 
Commitments and contingencies          
Shareholders' equity:              
  Common stock, no par, 200,000,000 shares authorized 58,715,672 and 58,092,346 shares issued and outstanding          
  Additional paid-in capital     198,929     197,160  
  Accumulated deficit     (135,561 )   (141,889 )
   
 
 
      63,368     55,271  
  Less treasury stock     (205 )   (215 )
   
 
 
    Total shareholders' equity     63,163     55,056  
   
 
 
    Total liabilities and shareholders' equity   $ 85,739   $ 74,456  
   
 
 


NIC Inc.

CASH FLOW SUMMARY

(UNAUDITED)

Thousands

 
  Three months ended
December 31,

  Twelve months ended
December 31,

 
 
  2003
  2002
  2003
  2002
 
Cash flows from operating activities:                          
  Net income (loss)   $ 2,900   $ 455   $ 6,328   $ (7,610 )
  Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                          
    Depreciation and amortization     370     555     1,783     3,379  
    Compensation expense recognized related to stock options                 1,307  
    Loss on disposal of property and equipment         310     12     1,769  
    Accretion of discount on marketable securities                 (4 )
    Application development contracts     (98 )   (1,545 )   (1,094 )   (2,403 )
    Impairment loss                 4,316  
    Deferred income taxes     (777 )   312     1,399     (6,191 )
    Deferred income tax benefit relating to stock options     (459 )       (546 )   1,146  
    Equity in net loss of affiliates     54     267     (107 )   1,235  
  Changes in operating assets and liabilities                          
    (Increase) decrease in trade accounts receivable     (604 )   172     (3,407 )   (2,634 )
    (Increase) decrease in prepaid expenses     109     (112 )   63     (138 )
    (Increase) in other current assets     (1,101 )   (655 )   (5,619 )   (406 )
    Decrease in other assets     8     39     29     110  
    Increase in accounts payable     3,051     1,442     3,594     1,469  
    Increase (decrease) in accrued expenses     (466 )   (1,006 )   1,493     (1,617 )
    (Decrease) in other current liabilities     (266 )   (252 )   (356 )   (95 )
   
 
 
 
 
  Net cash provided by (used in) operating activities     2,721     (18 )   3,572     (6,367 )
   
 
 
 
 
Cash flows from investing activities:                          
  Purchases of property and equipment     (445 )   (324 )   (1,519 )   (968 )
  Purchases of marketable securities         (2,746 )   (249 )   (23,745 )
  Maturities of marketable securities         9,659     249     27,566  
  Investments in affiliates and joint ventures                 (191 )
   
 
 
 
 
  Net cash provided by (used in) investing activities     (445 )   6,589     (1,519 )   2,662  
   
 
 
 
 
Cash flows from financing activities:                          
  (Increase) decrease in cash and cash equivalents—restricted     38     (6,300 )   937     (6,300 )
  Payments on notes payable     (38 )   (102 )   (170 )   (340 )
  Payments on capital lease obligation         (6 )       (14 )
  Payments to repurchase common stock         (215 )       (215 )
  Proceeds from exercise of employee stock options     621     1,236     1,161     2,882  
  Proceeds from stock subscriptions receivable                 15  
   
 
 
 
 
  Net cash provided (used in) by financing activities     621     (5,387 )   1,928     (3,972 )
   
 
 
 
 
Net increase (decrease) in cash and cash equivalents     2,897     1,184     3,981     (7,677 )
Cash and cash equivalents, beginning of period     10,643     8,375     9,559     17,236  
   
 
 
 
 
Cash and cash equivalents, end of period   $ 13,540   $ 9,559   $ 13,540   $ 9,559  
   
 
 
 
 



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NIC Reports Record Fourth Quarter 2003 Results as Operating Income Rises 63 Percent