EX-99 2 a5462025-ex99.txt EXHIBIT 99 EXHIBIT 99 NIC Earns Four Cents per Share in Second Quarter Same-State Portal Revenues Increase 14 Percent OLATHE, Kan.--(BUSINESS WIRE)--Aug. 1, 2007--NIC Inc. (Nasdaq: EGOV) today announced net income of $2.8 million and earnings per share of four cents on total revenues of $21.5 million for the three months ended June 30, 2007. Operating income was $4.5 million for the quarter. In second quarter 2006, the company reported net income of $3.2 million and earnings per share of five cents on total revenues of $18.8 million. Quarterly portal revenues were a record $20.6 million, a 16 percent increase over second quarter 2006. On a same-state basis, portal revenues grew 14 percent in the second quarter, compared to a nine percent increase during the same period a year ago. NIC's vehicle registration, online income tax payment and hunting and fishing license services performed well in the second quarter, helping same-state, transaction-based revenues from non-driver record exchange (non-DMV) applications rise 37 percent. DMV revenues grew 10 percent on a same-state basis in the second quarter, up from two percent growth during the same period last year. "Today's report is a product of our specialization," said Jeff Fraser, chief executive officer of NIC. "No other organization can match the depth or breadth of NIC's experience in eGovernment. Our eGovernment focus attracts new partners, like Arizona, because they know we will deliver exceptional value to state agencies as well as the citizens and businesses they serve. NIC's eGovernment experience and focus also delivers the kind of numbers we reported today and expect to report in the future." In the second quarter, NIC's portals launched a record 110 new non-DMV revenue-generating services. The company also has an all-time high of 170 applications in the development pipeline. Reflecting NIC's ongoing investment in long-term growth, selling and administrative expenses rose to $5.4 million in the current quarter compared to $3.6 million in the second quarter of 2006. As a percentage of portal revenue, selling and administrative expenses were 26 percent in the current quarter, up from 20 percent in the second quarter of 2006. "Our strategic growth investments are already starting to pay off," said Harry Herington, president of NIC. "Our sales pipeline is the best we've had in the history of the company, and the progress our portals are making is driving our success on non-DMV revenue." NIC estimates the cost of these initiatives will be $4 million to $6 million in 2007. NIC ended the second quarter with approximately $43.2 million in cash and investments, up $10.2 million from March 31, 2007. As announced earlier this year, the company declared a $0.75 per-share special dividend in the first quarter that it paid to shareholders on February 20, 2007. NIC paid the $46.7 million dividend from its short-term investments and cash reserves. Operating Highlights The company announced recently that it had finalized a contract with the state of Arizona, bringing the total number of state partners to 20 and increasing the population served to 67 million. "We're grateful for the vote of confidence given us by Arizona," said Fraser. "We look forward to developing outstanding eGovernment solutions for the state and its citizens and businesses for years to come." 2007 Outlook For full-year 2007, NIC's updated projections reflect strong performance in the first two quarters, normal seasonality in the second half of the year and a partial year of start-up costs from the Arizona contract. The company projects: total revenues of $82.5 million to $83.8 million, portal revenues of $79.5 million to $80.5 million, software and services revenues of $3.0 million to $3.3 million, operating income between $12.7 million and $13.2 million and net income between $8.1 million and $8.6 million. The company's projections do not include any new, unsigned portal contracts. "Our portal business continues its strong performance," said Steve Kovzan, NIC's vice president of financial operations. "Portal gross margins should range from 45 to 47 percent in 2007, with selling and administrative expenses as a percentage of portal revenues remaining in the 28 to 29 percent range we projected earlier this year, as we continue to invest in our long-term growth initiatives." Second-quarter Earnings Webcast Details Webcast Information Date: Wednesday, August 1, 2007 Time: 4:30 p.m. EDT URL: http://www.nicusa.com/investor (click on the Webcast link under "Second Quarter 2007 Earnings Announcement") Note: Some users may need to refresh their browsers to view the Webcast information. Audio Replay Information Available starting: Wednesday, August 1, 2007 6:10 p.m. EDT Available until: Wednesday, August 8, 2007 11:59 p.m. EDT Dial-in number: (800) 405-2236 Dial-in passcode: 11092664# Webcast Replay Information Available until: October 31, 2007 5:10 p.m. EST URL: http://www.nicusa.com/investor (click on the Webcast link in the Recent Events section under "Second Quarter 2007 Earnings Announcement") Podcast Replay URL: http://www.nicusa.com/investor (click on the podcast link in the Recent Events section under "Second Quarter 2007 Earnings Announcement") About NIC NIC manages more eGovernment services than any provider in the world. The company helps government communicate more effectively with citizens and businesses by putting essential services online. NIC provides eGovernment solutions for 2,600 state and local agencies that serve more than 67 million people in the United States. Additional information is available at http://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 2006 Annual Report on Form 10-K filed on March 15, 2007, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 filed on May 7, 2007, with the Securities and Exchange Commission. NIC Inc. FINANCIAL SUMMARY (UNAUDITED) thousands except per share amounts Three months ended Six months ended June 30, June 30, ------------------ ----------------- 2007 2006 2007 2006 --------- -------- -------- -------- Revenues: Portal revenues $20,610 $17,794 $40,478 $34,783 Software & services revenues 866 968 1,632 (274) --------- -------- -------- -------- Total revenues 21,476 18,762 42,110 34,509 --------- -------- -------- -------- Operating expenses: Cost of portal revenues, exclusive of depreciation & amortization 10,419 8,931 20,873 17,208 Cost of software & services revenues, exclusive of depreciation & amortization 493 767 964 (563) Selling & administrative 5,445 3,560 10,565 6,988 Depreciation & amortization 577 525 1,112 1,030 --------- -------- -------- -------- Total operating expenses 16,934 13,783 33,514 24,663 --------- -------- -------- -------- Operating income 4,542 4,979 8,596 9,846 --------- -------- -------- -------- Other income (expense): Interest income 317 498 897 878 Equity in net loss of affiliates - - - (97) --------- -------- -------- -------- Total other income (expense) 317 498 897 781 --------- -------- -------- -------- Income before income taxes 4,859 5,477 9,493 10,627 Income tax provision 2,107 2,232 3,995 4,464 --------- -------- -------- -------- Net income $2,752 $3,245 $5,498 $6,163 ========= ======== ======== ======== Basic net income per share $0.04 $0.05 $0.09 $0.10 ========= ======== ======== ======== Diluted net income per share $0.04 $0.05 $0.09 $0.10 ========= ======== ======== ======== Weighted average shares outstanding: Basic 61,769 61,381 61,711 61,250 ========= ======== ======== ======== Diluted 62,256 61,839 62,113 61,713 ========= ======== ======== ======== Key Financial Metrics: Revenue growth - outsourced portals 16% 24% 16% 24% Same state revenue growth - outsourced portals 14% 9% 15% 9% Gross profit % - outsourced portals 49% 50% 48% 51% Selling & administrative as a % of portal revenue 26% 20% 26% 20% Recurring portal revenue percentage 95% 96% 94% 97% Operating income margin as % of portal revenue 22% 28% 21% 28% Portal Revenue Analysis: DMV transaction-based $11,275 $10,837 $22,736 $22,014 Non-DMV transaction based 7,266 6,297 13,281 11,559 Software development & portal management 2,069 660 4,461 1,210 --------- -------- -------- -------- Total $20,610 $17,794 $40,478 $34,783 ========= ======== ======== ======== NIC Inc. CONSOLIDATED BALANCE SHEETS (UNAUDITED) thousands June 30, December 31, 2007 2006 -------------------------- ASSETS Current assets: Cash and cash equivalents $41,244 $36,745 Marketable securities 2,000 45,008 Trade accounts receivable 28,312 28,729 Unbilled revenues 441 1,069 Deferred income taxes 4,934 5,290 Prepaid expenses & other current assets 1,477 1,645 -------------------------- Total current assets 78,408 118,486 Property and equipment, net 4,384 3,790 Deferred income taxes 15,435 17,434 Other assets 555 424 -------------------------- Total assets $98,782 $140,134 ========================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $30,180 $34,202 Accrued expenses 7,007 5,911 Application development contracts 433 513 Other current liabilities 359 255 -------------------------- Total current liabilities 37,979 40,881 Other long-term liabilities 1,241 - -------------------------- Total liabilities 39,220 40,881 -------------------------- Commitments and contingencies - - Shareholders' equity: Common stock, no par, 200,000 shares authorized 61,781 and 61,574 shares issued and outstanding - - Additional paid-in capital 165,089 210,210 Accumulated deficit (105,359) (110,789) -------------------------- 59,730 99,421 Less treasury stock (168) (168) -------------------------- Total shareholders' equity 59,562 99,253 -------------------------- Total liabilities and shareholders' equity $98,782 $140,134 ========================== NIC INC. SUMMARY OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) Thousands Common Stock Additional ------------- Paid-in Accumulated Treasury Shares Amount Capital Deficit Stock Total ------ ------ ---------- ----------- -------- -------- Balance, January 1, 2007 61,574 $- $210,210 $(110,789) $(168) $99,253 Cumulative effect of FIN 48 - - - (68) - (68) Net income - - - 5,498 - 5,498 Cash dividends on common stock - - (46,730) - - (46,730) Stock option exercises & restricted stock vestings 154 - 506 - - 506 Stock-based compensation - - 864 - - 864 Issuance of common stock under employee stock purchase plan 53 - 239 - - 239 ------ ------ ---------- ----------- -------- -------- Balance, June 30, 2007 61,781 $- $165,089 $(105,359) $(168) $59,562 ====== ====== ========== =========== ======== ======== CASH FLOW SUMMARY (UNAUDITED) Thousands Three months ended Six months ended June 30, June 30, ------------------ ----------------- 2007 2006 2007 2006 --------- -------- -------- -------- Cash flows from operating activities: Net income $2,752 $3,245 $5,498 $6,163 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation & amortization 577 525 1,112 1,030 Stock-based compensation expense 453 152 864 352 Application development contracts (41) (99) (80) (655) Deferred income taxes 1,750 1,999 3,406 4,070 Equity in net loss of affiliates - - - 97 Changes in operating assets and liabilities: (Increase) decrease in trade accounts receivable 9,125 (105) 417 (4,463) (Increase) decrease in unbilled revenues (236) 1,070 628 3,099 (Increase) decrease in prepaid expenses & other current assets (282) 290 168 177 Decrease in other assets 2 - 2 9 Increase (decrease) in accounts payable (4,517) (4,815) (4,022) 3,078 Increase (decrease) in accrued expenses 1,037 152 1,096 (1,831) Increase (decrease) in other current liabilities 101 78 104 (63) Increase in other long-term liabilities 122 - 122 - --------- -------- -------- -------- Net cash provided by operating activities 10,843 2,492 9,315 11,063 --------- -------- -------- -------- Cash flows from investing activities: Purchases of property and equipment (612) (491) (1,658) (1,276) Capitalized internal use software development costs (122) (37) (181) (83) Purchases of marketable securities (2,000) (8,000) (2,000) (13,000) Sales and maturities of marketable securities - - 45,008 - --------- -------- -------- -------- Net cash provided by (used in) investing activities (2,734) (8,528) 41,169 (14,359) --------- -------- -------- -------- Cash flows from financing activities: Cash dividends on common stock - - (46,730) - Proceeds from sale of treasury stock - - - 65 Proceeds from employee common stock purchases - - 239 157 Proceeds from exercise of employee stock options 52 691 506 998 --------- -------- -------- -------- Net cash provided by (used in) financing activities 52 691 (45,985) 1,220 --------- -------- -------- -------- Net increase (decrease) in cash and cash equivalents 8,161 (5,345) 4,499 (2,076) Cash and cash equivalents, beginning of period 33,083 40,171 36,745 36,902 --------- -------- -------- -------- Cash and cash equivalents, end of period $41,244 $34,826 $41,244 $34,826 ========= ======== ======== ======== CONTACT: NIC Inc. David Oboyski, 913-754-7054 doboyski@nicusa.com