Exhibit 99
NIC Earns 5 Cents Per Share on Record Operating Income of $5.0 Million During
the Second Quarter
OLATHE, Kan.--(BUSINESS WIRE)--July 27, 2006--NIC Inc.
(NASDAQ:EGOV) today reported net income of $3.2 million and earnings
per share of 5 cents on total revenues of $18.8 million for the three
months ended June 30, 2006. Driven by strong performance in NIC's core
portal business, net income rose 31 percent over the same period last
year. Operating income was a record $5.0 million in the second
quarter, up 27 percent over second quarter 2005.
The Company posted net income of $2.5 million and earnings per
share of 4 cents on total revenues of $15.6 million in second quarter
2005.
For the second quarter of 2006, portal revenues of $17.8 million
were the highest in the Company's history, up 24 percent over the
prior year quarter. On a same-state basis, portal revenues grew 9
percent in the second quarter. NIC's online hunting & fishing license,
professional license renewal, and income tax filing services performed
well in the second quarter, helping same-state revenues from
non-driver record exchange (non-DMV) services to increase 18 percent
over the prior year quarter.
Driven partially by strong performance from the Company's two
newest portals in South Carolina and Colorado, revenues from driver
record exchange (DMV) services grew 25 percent during the quarter. In
line with expectations, same-state DMV revenues increased 2 percent
over second quarter 2005.
"The consistent performance of our core portal business is
reflected in our second quarter results," said Jeff Fraser, Chief
Executive Officer of NIC. "We continue to reinforce our position as
the market leader in building and marketing eGovernment services that
deliver value to our government partners and the citizens and
businesses they serve."
In the second quarter, NIC's portals launched 66 new non-DMV
revenue-generating services and another 140 applications are in the
development pipeline. "We continue to see great opportunity to both
build new services and cross-sell existing applications across our
base of 18 state partners," said Harry Herington, President of NIC.
Reflecting the continued wind-down of the software and services
business, software and services revenues in the second quarter were
$1.0 million, down 21 percent from the prior year quarter.
Selling and administrative expenses for the current quarter were
$3.6 million, a 9 percent increase from the prior year quarter. As a
percentage of portal revenues, selling and administrative expenses
were 20 percent, down from 23 percent in second quarter 2005.
NIC ended the quarter with $68.3 million in cash and marketable
securities, up $2.7 million from March 31, 2006.
Operating Highlights
In late June, the state of Indiana and NIC signed a new portal
development and maintenance contract with a funding model that
includes recurring fixed monthly fees as well as transaction- and
project-based pricing. The contract has a baseline value of $18
million and a potential value of $44 million over the initial
four-year term.
During the second quarter, a multiyear portal management contract
renewal was issued by the state of Maine, and one-year contract
extensions were also granted by the states of Oklahoma and South
Carolina.
"There is significant upside potential in the Indiana contract and
we are eager to continue developing innovative solutions for the
state. We believe our success in Indiana will generate new growth
opportunities in states that want to work with NIC but have not yet
been able to initiate self-funded procurements. I also want to thank
our partners in Maine, Oklahoma, and South Carolina for their ongoing
votes of confidence. We look forward to further expanding our
eGovernment efforts in each of these states," concluded Fraser.
Third Quarter 2006 Outlook
For third quarter 2006, NIC expects total revenues of $17.0 -
$17.3 million, portal revenues of $16.5 - $16.8 million, and software
and services revenues of approximately $0.5 million. The Company also
anticipates operating income between $3.0 - $3.2 million and net
income of $2.0 - $2.2 million.
"NIC's third quarter guidance reflects two items that we expect
will impact our performance over the next two quarters," said Eric
Bur, NIC's Chief Financial Officer. "Retaining our key employees is an
important component of NIC's future growth, and we adjusted
compensation for top producers at the end of the second quarter to
better align with the market. We also anticipate reduced revenues from
the Indiana contract while we ramp up variable services through the
year."
NIC's third quarter estimates do not include any new portal
contracts.
Second Quarter Earnings Webcast Details
Webcast Information
Thursday, July 27, 2006
9:00 a.m. (EDT)
Call leaders: Jeff Fraser, Chief Executive Officer
Harry Herington, President
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 26, 2006, by visiting www.nicusa.com/investor.
An audio replay of NIC's second quarter earnings call will be
available until 11:00 p.m. (EDT) on August 3 by dialing 1-800-405-2236
and using passcode 11065538. The conference call replay will also be
available 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
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 2005 Annual
Report on Form 10-K filed on March 16, 2006, with the Securities and
Exchange Commission.
(financial tables follow)
NIC Inc.
FINANCIAL SUMMARY
(UNAUDITED)
Thousands except for per share amounts
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
-------- -------- -------- --------
Revenues:
Portal revenues $17,794 $14,386 $34,783 $28,047
Software & services revenues 968 1,231 (274) (1,150)
-------- -------- -------- --------
Total revenues 18,762 15,617 34,509 26,897
-------- -------- -------- --------
Operating expenses:
Cost of portal revenues,
exclusive of depreciation &
amortization 8,931 7,093 17,208 13,808
Cost of software & services
revenues, exclusive of
depreciation & amortization 767 948 (563) 3,325
Selling & administrative 3,560 3,277 6,988 6,559
Depreciation & amortization 525 368 1,030 720
-------- -------- -------- --------
Total operating expenses 13,783 11,686 24,663 24,412
-------- -------- -------- --------
Operating income 4,979 3,931 9,846 2,485
-------- -------- -------- --------
Other income (expense):
Interest income 498 155 878 236
Equity in net loss of
affiliates - - (97) -
Other income (expense), net - - - (3)
-------- -------- -------- --------
Total other income (expense) 498 155 781 233
-------- -------- -------- --------
Income before income taxes 5,477 4,086 10,627 2,718
Income tax provision 2,232 1,616 4,464 1,145
-------- -------- -------- --------
Net income $3,245 $2,470 $6,163 $1,573
======== ======== ======== ========
Basic net income per share $0.05 $0.04 $0.10 $0.03
======== ======== ======== ========
Diluted net income per share $0.05 $0.04 $0.10 $0.03
======== ======== ======== ========
Weighted average shares
outstanding:
Basic 61,370 59,832 61,250 59,618
======== ======== ======== ========
Diluted 61,828 60,794 61,713 60,736
======== ======== ======== ========
Key Financial Metrics:
Revenue growth - outsourced
portals 24% 17% 24% 15%
Same state revenue growth -
outsourced portals 9% 18% 9% 17%
Gross profit percentage -
outsourced portals 50% 51% 51% 51%
Selling & administrative costs
as a percentage of revenue 20% 23% 20% 23%
Portal Revenue Analysis
(thousands):
DMV transaction-based $10,837 $8,650 $22,014 $17,300
Non-DMV transaction-based 6,297 5,295 11,559 9,647
Software development & portal
management 660 441 1,210 1,100
-------- -------- -------- --------
Total $17,794 $14,386 $34,783 $28,047
======== ======== ======== ========
NIC Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except for share amounts
June 30, December 31,
2006 2005
----------- --------------
ASSETS
Current assets:
Cash and cash equivalents $34,826 $36,902
Marketable securities 33,500 20,500
Trade accounts receivable 26,732 22,269
Unbilled revenues 494 2,198
Deferred income taxes 759 421
Prepaid expenses & other
current assets 1,440 1,632
--------- ---------
Total current assets 97,751 83,922
Property and equipment, net 3,573 3,327
Unbilled revenues - 1,395
Deferred income taxes 24,508 28,916
Other assets 278 285
--------- ---------
Total assets $126,110 $117,845
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $27,536 $24,458
Accrued expenses 4,811 6,642
Application development
contracts 606 1,261
Other current liabilities 254 317
--------- ---------
Total current liabilities 33,207 32,678
--------- ---------
Commitments and contingencies - -
Shareholders' equity:
Common stock, no par,
200,000,000 shares authorized,
61,488,309 and 61,073,595
shares issued and outstanding - -
Additional paid-in capital 209,001 207,444
Accumulated deficit (115,930) (122,093)
--------- ---------
93,071 85,351
Less treasury stock (168) (184)
--------- ---------
Total shareholders' equity 92,903 85,167
--------- ---------
Total liabilities and
shareholders' equity $126,110 $117,845
========= =========
CONTACT: NIC Inc.
Chris Neff, 435-645-8898
cneff@nicusa.com