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