EX-99 2 a4940571ex99.txt EXHIBIT 99 - PRESS RELEASE EXHIBIT 99 NIC Earns Four Cents Per Share on a 35 Percent Increase in Net Income During the Second Quarter OLATHE, Kan.--(BUSINESS WIRE)--July 28, 2005--NIC Inc. (Nasdaq:EGOV) today reported net income of $2.5 million and earnings per share of four cents on total revenues of $15.6 million for the three months ended June 30, 2005. Driven by a 47 percent increase in non-driver record exchange (non-DMV) revenues in the core portal business, NIC's net income rose 35 percent over the same period last year. Operating income was $3.9 million in the second quarter, up 24 percent over second quarter 2004. 2Q 2005 Operating Highlights ---------------------------- Three months ended June 30 (thousands) 2005 2004 Change ---- ---- ------ Portal Revenues $14,386 $12,255 17% Portal Cost of Revenues 7,093 6,189 15% ------ ------ Portal Gross Profit $7,293 $6,066 20% Portal Gross Profit % 51% 49% Operating Income $3,931 $3,174 24% Operating Income Margin % 25% 22% Net income $2,470 $1,826 35% The Company posted net income of $1.8 million and earnings per share of three cents on total revenues of $14.3 million in second quarter 2004. For the second quarter of 2005, portal revenues were $14.4 million, a 17 percent increase over the prior year quarter. On a same state basis, portal revenues grew 18 percent in the second quarter. NIC's online hunting and fishing license, professional license renewal, income tax filing, and vehicle registration renewal services performed well in the second quarter, helping same state revenues from non-DMV services to increase 50 percent over the prior year quarter. During the same period last year, same state non-DMV revenues grew 37 percent. Driven partially by the launch of the South Carolina portal on June 1, revenues from driver record exchange (DMV) services grew 13 percent during the quarter. On a same state basis, DMV revenues increased 10 percent over second quarter 2004. "NIC's portal operations had another strong quarter, and we expect this trend to continue," said Jeff Fraser, Chief Executive Officer of NIC. "Our second quarter performance reflects NIC's ability to consistently build, enhance, and market revenue-generating services that constituents expect from government." In the second quarter, NIC's portals launched 57 new non-DMV revenue-generating services and another 150 applications are in the development pipeline. "We see tremendous opportunity for our core business to build incremental applications that deliver value to our government partners as well as the citizens and businesses they serve," said Harry Herington, NIC's Chief Operating Officer. In line with expectations, revenues for the software and services business in the second quarter were $1.2 million, down 41 percent from the prior year quarter. Selling and administrative expenses for the current quarter were $3.3 million, up from $2.9 million in the prior year quarter. As a percentage of revenue, selling and administrative expenses were flat at 21 percent on a year-over-year basis. NIC ended the quarter with $42.9 million in cash and marketable securities, up $3.0 million from March 31, 2005. "Our success in launching new non-DMV revenue-generating services, growing same state profits, and tightly managing corporate expenses demonstrates how NIC is effectively leveraging the self-funded business model," concluded Herington. Second Quarter Operating Highlights During the second quarter, the Company's portal operations were enhanced by the June 1 launch of the self-funded eGovernment portal for the state of South Carolina (www.mySCgov.com). Following a competitive bid process, NIC has secured a new five-year agreement to manage the state of Tennessee's self-funded portal (www.Tennessee.gov), and long-term renewals were also granted by the states of Arkansas (www.Arkansas.gov) and Kansas (www.accessKansas.org). "We welcome South Carolina to the NIC family and thank Tennessee, Arkansas, and Kansas for their ongoing votes of confidence. Our self-funded portals continue to thrive across the country by adding unparalleled value to governments and taxpayers," concluded Fraser. Third Quarter 2005 Outlook For third quarter 2005, NIC expects total revenues of $15.0 - $15.5 million, portal revenues of $14.2 - $14.5 million, and software and services revenues of $0.8 - $1.0 million. The Company also anticipates operating income between $3.6 - $3.8 million and net income of $2.1 - $2.3 million. "NIC's projections do not include any new or unsigned contracts and also reflect our exit from the standalone local portal business, which generated $1.0 million of low-margin revenue in 2004," said Eric Bur, NIC's Chief Financial Officer. "In line with our performance in first quarter, 97 percent of portal revenues should be transactional throughout 2005 as we swap the occasional portal software development project for recurring revenue opportunities." Second Quarter Earnings Webcast Details Webcast Information Thursday, July 28, 2005 9:00 a.m. (EDT) Call leaders: Harry Herington, Chief Operating Officer Eric Bur, Chief Financial Officer 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 October 27, 2005, by visiting www.nicusa.com/investor. An audio replay of the call will also be available until 11:00 p.m. (EDT) on August 4 by dialing 800-405-2236 and using passcode 11035119. 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 2,000 state and local agencies that serve more than 55 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 2004 Annual Report on Form 10-K/A filed on March 16, 2005, with the Securities and Exchange Commission. NIC Inc. FINANCIAL SUMMARY (UNAUDITED) Thousands except for per share amounts Three months ended Six months ended June 30, June 30, 2005 2004 2005 2004 ---- ---- ---- ---- Revenues: Portal revenues $14,386 $12,255 $28,047 $24,486 Software & services revenues 1,231 2,082 (1,150) 4,271 ------ ------ ------ ------ Total revenues 15,617 14,337 26,897 28,757 ------ ------ ------ ------ Operating expenses: Cost of portal revenues, exclusive of depreciation & amortization 7,093 6,189 13,808 12,042 Cost of software & services revenues, exclusive of depreciation & amortization 948 1,649 3,325 3,729 Selling & administrative 3,277 2,945 6,559 6,177 Depreciation & amortization 368 380 720 769 ------ ------ ------ ------ Total operating expenses 11,686 11,163 24,412 22,717 ------ ------ ------ ------ Operating income 3,931 3,174 2,485 6,040 ------ ------ ------ ------ Other income (expense): Interest income 155 23 236 44 Interest expense - (4) - (9) Equity in net loss of affiliates - (40) - (109) Other income (expense), net - - (3) - ------ ------ ------ ------ Total other income (expense) 155 (21) 233 (74) ------ ------ ------ ------ Income before income taxes 4,086 3,153 2,718 5,966 Income tax provision 1,616 1,327 1,145 2,538 ------ ------ ------ ------ Net income $2,470 $1,826 $1,573 $3,428 ====== ====== ====== ====== Basic and diluted earnings per share $0.04 $0.03 $0.03 $0.06 ====== ====== ====== ====== Weighted average shares outstanding: Basic 59,832 58,870 59,618 58,807 ====== ====== ====== ====== Diluted 60,794 60,884 60,736 60,950 ====== ====== ====== ====== Key Financial Metrics: Revenue growth - outsourced portals 17% 21% 15% 23% Same state revenue growth - outsourced portals 18% 18% 17% 20% Revenue growth - software & services (41%) (24%) (127%) (22%) Gross profit percentage - outsourced portals 51% 49% 51% 51% Gross profit percentage - software & services 23% 21% N/A 13% Selling & administrative costs as a percentage of revenue 21% 21% 24% 21% Operating income margin percentage 25% 22% 9% 21% Portal Revenue Analysis (thousands): DMV transaction-based $8,650 $7,650 $17,300 $15,529 Non-DMV transaction-based 5,295 3,597 9,647 6,940 Software development & portal management 441 1,008 1,100 2,017 ------ ------ ------ ------ Total $14,386 $12,255 $28,047 $24,486 ====== ====== ====== ====== NIC Inc. CONSOLIDATED BALANCE SHEETS (UNAUDITED) Thousands except for share amounts June 30, December 31, 2005 2004 ---- ---- ASSETS Current assets: Cash and cash equivalents $34,898 $30,769 Cash and cash equivalents - restricted - 3,000 Marketable securities 8,000 - Trade accounts receivable 22,323 17,610 Unbilled revenues 1,133 3,400 Deferred income taxes 807 433 Prepaid expenses & other current assets 1,025 1,312 ------ ------ Total current assets 68,186 56,524 Property and equipment, net 2,360 2,603 Unbilled revenues 979 2,404 Deferred income taxes 30,543 31,274 Other assets 204 266 ------- ------- Total assets $102,272 $93,071 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $19,372 $14,394 Accrued expenses 5,200 6,266 Application development contracts 1,458 - Other current liabilities 120 151 ------ ------ Total current liabilities 26,150 20,811 ------ ------ Commitments and contingencies - - Shareholders' equity: Common stock, no par, 200,000,000 shares authorized 60,030,662 and 59,301,375 shares issued and outstanding - - Additional paid-in capital 203,189 200,921 Accumulated deficit (126,883) (128,456) ------- ------- 76,306 72,456 Less treasury stock (184) (205) ------ ------ Total shareholders' equity 76,122 72,260 ------ ------ Total liabilities and shareholders' equity $102,272 $93,071 ======= ======= NIC Inc. CASH FLOW SUMMARY (UNAUDITED) Thousands Three months ended Six months ended June 30, June 30, 2005 2004 2005 2004 ---- ---- ---- ---- Cash flows from operating activities: Net income $2,470 $1,826 $1,573 $3,428 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation & amortization 368 381 720 769 Application development contracts (65) (21) 1,458 (19) Deferred income taxes 1,619 1,228 1,037 2,376 Equity in net loss of affiliates - 40 - 109 Changes in operating assets and liabilities (Increase) in trade accounts receivable (1,875) (199) (4,713) (2,685) Decrease in unbilled revenues 25 5,232 3,692 3,715 (Increase) decrease prepaid expenses & other current assets 9 (14) 293 348 Decrease in other assets 68 - 62 2 Increase (decrease) in accounts payable (90) (2,333) 4,978 (1,470) Increase (decrease) in accrued expenses (72) (212) (1,066) 1,314 (Decrease) in other current liabilities (8) (43) (31) (15) ------ ------ ------ ------ Net cash provided by operating activities 2,449 5,885 8,003 7,872 ------ ------ ------ ------ Cash flows from investing activities: Purchases of property and equipment (342) (229) (478) (855) Purchases of marketable securities (16,000) - (23,000) - Maturities of marketable securities 12,000 250 15,000 250 Proceeds from sale of affiliate - 300 - 300 ------ ------ ------ ------ Net cash provided by (used in) investing activities (4,342) 321 (8,478) (305) ------ ------ ------ ------ Cash flows from financing activities: Cash and cash equivalents - restricted 3,000 39 3,000 77 Payments on note payable - (39) - (77) Proceeds from employee common stock purchases - - 122 117 Proceeds from exercise of employee stock options 870 74 1,482 216 ------ ------ ------ ------ Net cash provided by financing activities 3,870 74 4,604 333 ------ ------ ------ ------ Net increase in cash and cash equivalents 1,977 6,280 4,129 7,900 Cash and cash equivalents, beginning of period 32,921 15,160 30,769 13,540 ------ ------ ------ ------ Cash and cash equivalents, end of period $34,898 $21,440 $34,898 $21,440 ====== ====== ====== ====== CONTACT: NIC Inc. Chris Neff, 435-645-8898 cneff@nicusa.com