Nic (EGOV) 8-K NIC Earns 17 Cents Per Share in Second Quarter 2014; Same-State Revenues and Contribution from New State Portals Drive 26 Percent Operating Margin

Exhibit 99

NIC Earns 17 Cents Per Share in Second Quarter 2014; Same-State Revenues and Contribution from New State Portals Drive 26 Percent Operating Margin

OLATHE, Kan.--(BUSINESS WIRE)--August 7, 2014--NIC Inc. (NASDAQ: EGOV), the dominant provider of official eGovernment services, today announced net income of $11.0 million and earnings per share of 17 cents on total revenues of $71.2 million for the three months ended June 30, 2014. In the second quarter of 2013, the Company reported net income of $10.8 million and earnings per share of 16 cents on total revenues of $65.9 million.

Quarterly portal revenues were a record $66.8 million, an 8 percent increase over second quarter 2013. On a same-state basis, portal revenues were $61.4 million in the current quarter, an 8 percent increase over the second quarter of 2013. Same-state, transaction-based revenues from Interactive Government Services (IGS, formerly referred to as non-DMV) rose 8 percent over second quarter 2013, with same-state revenues from driver history records (DHR, formerly referred to as DMV) up 9 percent, driven by DHR price increases in three states and continued transaction volume growth across several states. Same-state portal time & materials revenues rose 1 percent and same-state portal management revenues were up 3 percent for the quarter.

Current quarter revenues from the Company’s newer portals in Pennsylvania, Wisconsin, and Connecticut totaled $2.3 million, $1.2 million, and $1.1 million, respectively. In the prior year quarter, revenues from the Pennsylvania portal were $2.5 million. The Wisconsin portal began generating revenues in the third quarter of 2013, and the Connecticut portal began generating revenues in the current quarter. Revenues from the Virginia state agency partnerships were $0.7 million in the current quarter, while revenues from the legacy Virginia state portal contract in the prior year quarter were $1.6 million. The legacy Arizona state portal contract expired on March 26, 2014, while revenues from this contract in the prior year quarter were $1.1 million.

“Adding a new partner is one of the most exciting times at NIC,” said Harry Herington, NIC Chief Executive Officer and Chairman of the Board. “In January, it was great to welcome Connecticut as our newest partner. And, this quarter I was pleased to see Connecticut contributing to our solid financial results.”

Portal gross profits were $28.3 million in the current quarter compared to $27.2 million in the prior year quarter. NIC’s portal gross profit percentage was 42 percent in the current quarter, down from 44 percent in the prior year quarter, due mainly to lower gross profits from the Texas portal and from the expiration of the legacy Virginia and Arizona portal contracts.

Software & services revenues were $4.3 million in the current quarter, up 13 percent from the second quarter of 2013, driven in part by an increase in revenues from the federal Pre-employment Screening Program. As a result, software & services gross profits increased 18 percent from the prior year quarter to $3.1 million.

“Given our positive trajectory through the first half of 2014, we are currently on pace to comfortably meet or exceed the high end of our previously issued total revenue and earnings estimates for the year,” said Steve Kovzan, NIC’s Chief Financial Officer.

Operational Highlights

NIC subsidiaries recently won competitive bids for new, long-term contracts with several current government partners. The state of Iowa signed a two-year contract with Iowa Interactive, LLC to continue providing self-funded eGovernment services. The contract also includes renewals that the state can exercise to extend the contract through June 2020. Rhode Island Interactive, LLC signed a new contract with the state of Rhode Island. The new agreement includes a three-year base contract and renewal opportunities that could extend the contract to July 2019. The New Mexico Motor Vehicle Division (MVD) signed a new contract with New Mexico Interactive, LLC. The two-year contract includes renewal options that the MVD can exercise to extend the contract through June 2018. And, South Carolina Interactive, LLC was awarded a new five-year contract by the state of South Carolina that includes renewal options that the state can exercise to extend the contract through July 2021.

Kansas Information Consortium, Inc. was also awarded a new, long-term contract by the state of Kansas, ahead of its contract expiration date. The portal was awarded a new seven-year contract, which includes renewal options.

In addition to signing new long-term contracts, two NIC subsidiaries received contract extensions. Kentucky Interactive, LLC received a one-year contract extension from the Commonwealth of Kentucky and Indiana Interactive, LLC received a two-year contract extension from the state of Indiana.

Second Quarter Earnings Call and Webcast Details

On the call, the Company will discuss its 2014 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 7, 2014
4:30 p.m. (EDT)
Call bridge:	888-539-3612 (U.S. callers) or 719-325-2494 (international callers)
Conference ID:	9915166
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 http://www.egov.com/investors.
A replay of the Webcast will be available until 11 p.m. (EST) on Feb. 6, 2015, by visiting http://www.egov.com/investors.

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” five times, most recently ranked at No.11 (2013), and the Company has been included three times on the Barron’s 400 Index. Additional information is available at http://www.egov.com.

Cautionary Statement Regarding Forward-Looking Information

Any statements contained in this release that do not relate to historical or current facts constitute forward-looking statements. These statements include statements regarding the Company’s potential financial performance for the current fiscal year, statements regarding the planned implementation of new portal contracts and projects under existing portal contracts, and statements regarding continued implementation of NIC’s business model and its development of new products and services. Forward-looking statements are subject to inherent risks and uncertainties and there can be no assurance that such statements will prove to be correct. 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, NIC’s ability to successfully integrate into its operations recently awarded eGovernment contracts; NIC's ability to implement its new portal contracts and new projects in a timely and cost-effective manner; NIC’s ability to successfully increase the adoption and use of eGovernment services; the possibility of reductions in fees or revenues as a result of budget deficits, government shutdowns or changes in government policy; the success of the Company in renewing existing contracts and in signing contracts with new states and federal government agencies; 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; the possibility of security breaches through cyber attacks and any resulting liability; and general economic conditions and the other important cautionary statements and risk factors described in NIC's 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2014. Any forward-looking statements made in this release speak only as of the date of this release. NIC does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances.

FINANCIAL SUMMARY
(UNAUDITED)
Thousands except per share amounts and percentages
	Three months ended						Six months ended
	June 30,						June 30,
		2014			2013			2014			2013
Revenues:
Portal revenues	$	66,809		$	62,094		$	128,291		$	120,136
Software & services revenues		4,346			3,844			8,261			7,026
Total revenues		71,155			65,938			136,552			127,162
Operating expenses:
Cost of portal revenues, exclusive of depreciation & amortization		38,533			34,899			74,930			67,661
Cost of software & services revenues, exclusive of depreciation & amortization		1,214			1,189			2,174			2,292
Selling & administrative		10,864			10,058			21,165			19,667
Depreciation & amortization		2,277			2,049			4,527			4,076
Total operating expenses		52,888			48,195			102,796			93,696
Operating income		18,267			17,743			33,756			33,466
Other expense, net		(24	)		(2	)		(128	)		(21	)
Income before income taxes		18,243			17,741			33,628			33,445
Income tax provision		7,213			6,933			13,223			12,681
Net income	$	11,030		$	10,808		$	20,405		$	20,764
Basic net income per share	$	0.17		$	0.16		$	0.31		$	0.32
Diluted net income per share	$	0.17		$	0.16		$	0.31		$	0.32
Weighted average shares outstanding:
Basic		65,245			64,890			65,151			64,800
Diluted		65,245			64,890			65,151			64,800
Key Financial Metrics:
Revenue growth - outsourced portals		8	%		27	%		7	%		27	%
Same state revenue growth - outsourced portals		8	%		19	%		7	%		18	%
Recurring portal revenue as a % of total portal revenues		95	%		94	%		95	%		95	%
Gross profit % - outsourced portals		42	%		44	%		42	%		44	%
Revenue growth - software & services		13	%		31	%		18	%		18	%
Gross profit % - software & services		72	%		69	%		74	%		67	%
Selling & administrative expenses as a % of total revenues		15	%		15	%		16	%		15	%
Operating income as a % of total revenue		26	%		27	%		25	%		26	%
Portal Revenue Analysis:
IGS transaction-based (formerly, Non-DMV)	$	36,684		$	34,005		$	69,053		$	64,175
DMV transaction-based (formerly, DMV)		25,017			22,030			48,493			44,792
Portal software development		3,288			3,494			6,315			6,039
Portal management		1,820			2,565			4,430			5,130
Total portal revenues	$	66,809		$	62,094		$	128,291		$	120,136

NIC INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except par value amount
			June 30, 2014		December 31, 2013
ASSETS
	Current assets:
		Cash	$	95,658	$	74,245
		Cash restricted for payment of dividend		-		22,982
		Trade accounts receivable, net		61,211		52,818
		Deferred income taxes, net		1,028		1,038
		Prepaid expenses & other current assets		10,558		11,569
		Total current assets		168,455		162,652
	Property and equipment, net			13,674		15,167
	Intangible assets, net			2,062		1,864
	Other assets			332		290
		Total assets	$	184,523	$	179,973
LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
		Accounts payable	$	45,817	$	39,112
		Accrued expenses		18,384		20,822
		Dividend payable		-		22,982
		Other current liabilities		450		348
		Total current liabilities		64,651		83,264
	Deferred income taxes, net			2,287		2,432
	Other long-term liabilities			2,754		2,341
		Total liabilities		69,692		88,037
	Commitments and contingencies			-		-
	Stockholders' equity:
		Common stock, $0.0001 par, 200,000 shares authorized, 65,260 and 64,993 shares issued and outstanding		6		6
		Additional paid-in capital		90,887		88,397
		Retained earnings		23,938		3,533
		Total stockholders' equity		114,831		91,936
		Total liabilities and stockholders' equity	$	184,523	$	179,973

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, 2014	64,993	$ 6	$ 88,397	$ 3,533	$ 91,936
Net income	-	-	-	20,405	20,405
Restricted stock vestings	294	-	73	-	73
Dividend equivalents cancelled upon forfeiture of performance-based restricted stock awards	-	-	35	-	35
Shares surrendered and cancelled upon vesting of restricted stock to satisfy tax withholdings	(95)	-	(1,928)	-	(1,928)
Stock-based compensation	-	-	2,414	-	2,414
Tax deductions relating to stock-based compensation	-	-	897	-	897
Shares issuable in lieu of dividend payments on unvested performance-based restricted stock awards	-	-	(108)	-	(108)
Issuance of common stock under employee stock purchase plan	68	-	1,107	-	1,107
Balance, June 30, 2014	65,260	$ 6	$ 90,887	$ 23,938	$ 114,831

NIC INC.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands
		Three months ended						Six months ended
		June 30,						June 30,
			2014			2013			2014			2013
Cash flows from operating activities:
	Net income	$	11,029		$	10,807		$	20,405		$	20,764
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation & amortization		2,277			2,049			4,527			4,076
	Stock-based compensation expense		1,414			1,199			2,414			2,077
	Deferred income taxes		(818	)		(282	)		(1,494	)		(820	)
	Loss on disposal of property and equipment		24			2			128			21
	Changes in operating assets and liabilities:
	(Increase) decrease in trade accounts receivable, net		404			(3,666	)		(8,393	)		(14,349	)
	Decrease in prepaid expenses & other current assets		129			1,973			2,370			3,133
	(Increase) in other assets		(8	)		(1	)		(42	)		(2	)
	Increase (decrease) in accounts payable		(1,282	)		3,718			6,705			4,556
	Increase (decrease) in accrued expenses		2,811			1,229			(4,416	)		(1,672	)
	Increase (decrease) in other current liabilities		(313	)		1,165			102			1,180
	Increase in other long-term liabilities		252			229			413			714
	Net cash provided by operating activities		15,919			18,422			22,719			19,678
Cash flows from investing activities:
	Purchases of property and equipment		(1,734	)		(1,256	)		(2,653	)		(2,258	)
	Capitalized internal use software development costs		(332	)		(350	)		(657	)		(730	)
	Net cash used in investing activities		(2,066	)		(1,606	)		(3,310	)		(2,988	)
Cash flows from financing activities:
	Proceeds from employee common stock purchases		-			-			1,107			904
	Tax deductions related to stock-based compensation		207			155			897			736
	Net cash provided by financing activities		207			155			2,004			1,640
Net increase in cash			14,060			16,971			21,413			18,330
Cash, beginning of period			81,598			63,717			74,245			62,358
Cash, end of period		$	95,658		$	80,688		$	95,658		$	80,688
Other cash flow information:
Non-cash investing activities:
Capital expenditures accrued but not yet paid		$	50		$	86		$	50		$	86
Cash payments:
Income taxes paid		$	7,305		$	3,193		$	13,837		$	6,194
Cash dividends on common stock previously restricted for payment of dividend		$	-		$	-		$	22,982		$	-

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