Exhibit 99
NIC Earns Five Cents Per Share in the First Quarter; Record Operating Income of
$4.9 Million Driven by 24 Percent Increase in Portal Revenues
OLATHE, Kan.--(BUSINESS WIRE)--April 27, 2006--NIC Inc. (Nasdaq:
EGOV) today reported net income of $2.9 million and earnings per share
of five cents on total revenues of $15.7 million for the three months
ended March 31, 2006. The strength of the core outsourced portal
business and the continued ramp-up of first-year state portals
contributed to record operating income of $4.9 million in the first
quarter.
In the prior year quarter, the Company posted a net loss of $0.9
million and a loss of two cents per share on total revenues of $11.3
million. First quarter 2005 results include a pretax charge of $5.0
million relating to NIC's software and services contract with the
California Secretary of State. Absent this charge, operating income
would have been $3.5 million and net income would have been $2.1
million, or four cents per share, in the prior year quarter.
First quarter 2006 portal revenues of $17.0 million were the
highest in the Company's history, up 24 percent over the prior year
quarter. During the same period last year, portal revenues grew 12
percent. On a same state basis, portal revenues rose eight percent for
the quarter. Strong usage of NIC's tax payment, limited criminal
history search, Uniform Commercial Code filing, and professional
licensing services helped same state revenues from non-driver record
exchange (non-DMV) services to rise 22 percent.
A full quarter of revenues from the Company's South Carolina and
Colorado portals helped total revenues from driver record exchange
(DMV) services grow 29 percent during the first quarter. In line with
expectations, same state DMV revenues rose three percent during the
quarter.
"NIC's consistent performance in the first quarter is the result
of our focus on building relevant online services that improve
efficiencies for our government partners and the citizens and
businesses they serve," said Jeff Fraser, Chief Executive Officer.
The Company's state and local portals launched 72 new non-DMV
revenue-generating services in the first quarter, and another 158
applications are in the development pipeline. "NIC continues to lead
the industry in building and marketing value-added eGovernment
solutions," said Chief Operating Officer Harry Herington.
During the first quarter of 2006, the Company signed a contract
amendment with the California Secretary of State that, among other
changes, eliminated the business entity phase of the project. As a
result of the amendment, the Company recorded an adjustment under
percentage of completion accounting that reduced both software and
services revenues and costs of software and services revenues by
approximately $2.1 million. This adjustment had no effect on operating
income, net income, or earnings per share.
"This contract amendment is a positive development that will
significantly reduce NIC's risk exposure and allow us to conclude the
engagement with the California Secretary of State on a positive note,"
said Herington.
Selling and administrative expenses in the first quarter were $3.4
million, a four percent increase from the prior year quarter. As a
percentage of portal revenues, selling and administrative expenses
were 20 percent, down from 24 percent in the prior year quarter.
Beginning January 1, 2006, the Company began recognizing
stock-based compensation expense for the cost of stock options and
shares issued under the Company's employee stock purchase plan.
Operating expenses in the first quarter include $0.2 million of
non-cash stock-based compensation expense.
NIC ended the first quarter with $65.7 million in cash and
marketable securities, up $8.3 million from December 31, 2005.
Operating Highlights
In March, the state of Iowa and NIC signed a new portal management
agreement for up to six years following a competitive rebid. During
the same month, Virginia granted the Company a five-year renewal for
portal management services. "We thank our partners in Iowa and
Virginia for continuing to put their trust in NIC," concluded Fraser.
Second Quarter Outlook
For second quarter 2006, NIC expects total revenues of $17.7 -
$18.1 million, portal revenues of $17.2 - $17.5 million, and software
and services revenues of $0.5 - $0.6 million. The Company also
anticipates operating income between $4.4 - $4.6 million and net
income of $2.7 - $2.9 million.
For full year 2006, NIC's projections have been updated to reflect
expected total revenues of $66.8 - $67.7 million, portal revenues of
$66.3 - $66.9 million, and software and services revenues of $0.5 -
$0.8 million. The Company also expects operating income between $15.1
- - $15.6 million and net income of $9.5 - $9.8 million.
NIC's second quarter and full year 2006 estimates do not include
any new DMV fee increases or portal contracts.
First Quarter Earnings Webcast Details
Dial-In Information
Thursday, April 27, 2006
9:00 a.m. (EDT)
Webcast leaders: Jeff Fraser, Chief Executive Officer
Eric Bur, Chief Financial Officer
Harry Herington, Chief Operating 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 July 26 by visiting www.nicusa.com/investor.
A replay of NIC's first quarter earnings call will be available
until 11:00 p.m. (EDT) on May 4 by dialing 877-289-8525 and using
passcode 11058031. The conference call replay can also be accessed via
Podcast download 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 2,200 state and local agencies that
serve more than 60 million people in the United States. Additional
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 2005 Annual
Report on Form 10-K filed on March 16, 2006, with the Securities and
Exchange Commission.
NIC INC.
FINANCIAL SUMMARY
(UNAUDITED)
Thousands except for per share amounts
Three months ended
March 31,
2006 2005
--------- ---------
Revenues:
Portal revenues $16,989 $13,661
Software & services revenues (1,241) (2,381)
--------- ---------
Total revenues 15,748 11,280
--------- ---------
Operating expenses:
Cost of portal revenues, exclusive of
depreciation & amortization 8,277 6,715
Cost of software & services revenues,
exclusive of depreciation & amortization (1,329) 2,377
Selling & administrative 3,428 3,282
Depreciation & amortization 505 352
--------- ---------
Total operating expenses 10,881 12,726
--------- ---------
Operating income (loss) 4,867 (1,446)
--------- ---------
Other income (expense):
Interest income 380 81
Equity in net loss of affiliates (97) -
Other income (expense), net - (3)
--------- ---------
Total other income (expense) 283 78
--------- ---------
Income (loss) before income taxes 5,150 (1,368)
Income tax provision (benefit) 2,232 (471)
--------- ---------
Net income (loss) $2,918 $(897)
--------- ---------
Basic net income (loss) per share $0.05 $(0.02)
--------- ---------
Diluted net income (loss) per share $0.05 $(0.02)
--------- ---------
Weighted average shares outstanding:
Basic 61,129 59,402
--------- ---------
Diluted 61,596 59,402
--------- ---------
Key Financial Metrics:
Revenue growth - outsourced portals 24% 12%
Same state revenue growth - outsourced portals 8% 16%
Gross profit percentage - outsourced portals 51% 51%
Selling & administrative costs as a percentage
of portal revenues 20% 24%
Portal Revenue Analysis (Thousands):
DMV transaction-based $11,176 $8,650
Non-DMV transaction-based 5,263 4,371
Software development & portal management 550 640
--------- ---------
Total $16,989 $13,661
--------- ---------
NIC INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except for share amounts
March 31, December 31,
2006 2005
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $40,171 $36,902
Marketable securities 25,500 20,500
Trade accounts receivable 26,627 22,269
Unbilled revenues 1,564 2,198
Deferred income taxes 669 421
Prepaid expenses & other current assets 1,730 1,632
------------- -------------
Total current assets 96,261 83,922
Property and equipment, net 3,607 3,327
Unbilled revenues - 1,395
Deferred income taxes 26,597 28,916
Other assets 240 285
------------- -------------
Total assets $126,705 $117,845
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $32,351 $24,458
Accrued expenses 4,659 6,642
Application development contracts 705 1,261
Other current liabilities 176 317
------------- -------------
Total current liabilities 37,891 32,678
------------- -------------
Commitments and contingencies - -
Shareholders' equity:
Common stock, no par, 200,000,000 shares
authorized 61,221,904 and 61,073,595
shares issued and outstanding - -
Additional paid-in capital 208,157 207,444
Accumulated deficit (119,175) (122,093)
------------- -------------
88,982 85,351
Less treasury stock (168) (184)
------------- -------------
Total shareholders' equity 88,814 85,167
------------- -------------
Total liabilities and shareholders'
equity $126,705 $117,845
------------- -------------
NIC INC.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands
Three months ended
March 31,
2006 2005
--------- ---------
Cash flows from operating activities:
Net income (loss) $2,918 $(897)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation & amortization 505 352
Stock-based compensation expense 200 -
Application development contracts (556) 1,523
Deferred income taxes 2,071 (581)
Equity in net loss of affiliates 97 -
Changes in operating assets and liabilities
(Increase) in trade accounts receivable (4,358) (2,838)
Decrease in unbilled revenues 2,029 3,667
(Increase) decrease in prepaid expenses &
other current assets (113) 281
(Increase) in other assets (37) (6)
Increase in accounts payable 7,893 5,068
(Decrease) in accrued expenses (1,983) (994)
(Decrease) in other current liabilities (141) (23)
--------- ---------
Net cash provided by operating activities 8,525 5,552
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (785) (134)
Purchases of marketable securities (5,000) (7,000)
Maturities of marketable securities - 3,000
--------- ---------
Net cash used in investing activities (5,785) (4,134)
--------- ---------
Cash flows from financing activities:
Proceeds from sale of treasury stock 65 -
Proceeds from employee common stock purchases 157 122
Proceeds from exercise of employee stock options 307 612
--------- ---------
Net cash provided by financing activities 529 734
--------- ---------
Net increase in cash and cash equivalents 3,269 2,152
Cash and cash equivalents, beginning of period 36,902 30,769
--------- ---------
Cash and cash equivalents, end of period $40,171 $32,921
--------- ---------
CONTACT: NIC Inc.
Chris Neff, 435-645-8898
cneff@nicusa.com