Exhibit 99
NIC Earns Four Cents Per Share as Portal Revenues
Increase 18 Percent in the Third Quarter
OLATHE, Kan.--(BUSINESS WIRE)--Oct. 26, 2006--NIC Inc. (NASDAQ:
EGOV) today reported net income of $2.5 million and earnings per share
of four cents on total revenues of $18.0 million for the three months
ended September 30, 2006. Operating income was $3.6 million in the
third quarter.
The Company posted net income of $2.4 million and earnings per
share of four cents on total revenues of $16.0 million in third
quarter 2005.
For the third quarter of 2006, portal revenues of $17.2 million
were 18 percent higher than the prior year quarter. On a same state
basis, portal revenues grew eight percent in the third quarter and
were driven by strong performance from a variety of new
revenue-generating applications.
In the third quarter, NIC's portals launched more than 60 new
revenue-generating services and another 130 applications are in the
development pipeline. "Creating new applications is a key focus area
of our research and development program," said Harry Herington,
President of NIC. "We continue to identify, build, and commercialize
new revenue-generating services in each of our 18 state portals."
Reflecting the continued wind-down of the software and services
business, software and services revenues in the third quarter were
$0.8 million.
NIC ended the quarter with $74.7 million in cash and marketable
securities, up $6.4 million from June 30, 2006.
Investing in Growth
In the third quarter, NIC launched a new strategic investment
program to drive long-term growth.
"Our management team and the NIC Board of Directors believe that
the time is right to invest strategically in business development,"
said Jeff Fraser, Chief Executive Officer of NIC. "This program will
allow us to aggressively pursue more new state portal opportunities,
further increase new service cross-selling in our portal operations,
and identify the next generation of highly profitable products and
services."
In 2007, the Company expects to invest $6.0 - $8.0 million in
strategic long-term growth initiatives. Revenues from these
initiatives are not expected prior to 2008.
The initial implementation of the Company's new growth initiatives
was reflected in third quarter 2006 selling and administrative
expenses of $3.9 million, a 33 percent increase over the same period
last year. As a percentage of portal revenues, selling and
administrative expenses were 23 percent, up from 20 percent in third
quarter 2005.
Fourth Quarter 2006 Outlook
For fourth quarter 2006, NIC expects total revenues of $16.6 -
$16.9 million, portal revenues of $16.1 - $16.3 million, and software
and services revenues of $0.5 - $0.6 million. The Company also
anticipates operating income between $2.3 - $2.4 million and net
income of $1.7 - $1.8 million.
"NIC's fourth quarter guidance reflects seasonality as well as
some incremental investment as we enhance our sales, marketing, and
operations teams in preparation for a busy 2007," said Eric Bur, NIC's
Chief Financial Officer.
NIC's fourth quarter estimates do not include any new portal
contracts.
Third Quarter Webcast Details
Webcast Information
Thursday, October 26, 2006
9:00 a.m. (EDT)
To sign in and listen: The Webcast system is available at
www.nicusa.com/investor.
Call leaders: Jeff Fraser, Chief Executive Officer
Harry Herington, President
Eric Bur, Chief Financial Officer
Some users may need to refresh their browsers to view the Webcast
information. A replay of the Webcast will be available until 11:00
p.m. (EST) on January 25, 2007, by visiting www.nicusa.com/investor.
An audio replay of NIC's third quarter earnings call will be available
until 5:00 p.m. (EST) on November 2 by dialing 1-800-405-2236 and
using passcode 11065542.
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.
NIC Inc.
FINANCIAL SUMMARY
(UNAUDITED)
Thousands except for per share amounts
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
--------- -------- -------- --------
Revenues:
Portal revenues $17,214 $14,637 $51,997 $42,684
Software & services revenues 821 1,321 547 171
--------- -------- -------- --------
Total revenues 18,035 15,958 52,544 42,855
--------- -------- -------- --------
Operating expenses:
Cost of portal revenues,
exclusive of depreciation &
amortization 9,478 7,620 26,685 21,428
Cost of software & services
revenues, exclusive of
depreciation & amortization 565 1,117 3 4,442
Selling & administrative 3,916 2,948 10,904 9,507
Depreciation & amortization 501 422 1,531 1,141
--------- -------- -------- --------
Total operating expenses 14,460 12,107 39,123 36,518
--------- -------- -------- --------
Operating income 3,575 3,851 13,421 6,337
--------- -------- -------- --------
Other income (expense):
Interest income 666 197 1,544 432
Equity in net loss of
affiliates - - (97) -
Other income (expense), net (49) - (49) (3)
--------- -------- -------- --------
Total other income (expense) 617 197 1,398 429
--------- -------- -------- --------
Income before income taxes 4,192 4,048 14,819 6,766
Income tax provision 1,727 1,661 6,191 2,806
--------- -------- -------- --------
Net income $2,465 $2,387 $8,628 $3,960
========= ======== ======== ========
Basic net income per share $0.04 $0.04 $0.14 $0.07
========= ======== ======== ========
Diluted net income per share $0.04 $0.04 $0.14 $0.07
========= ======== ======== ========
Weighted average shares
outstanding:
Basic 61,536 60,271 61,353 59,838
========= ======== ======== ========
Diluted 61,798 61,226 61,749 60,902
========= ======== ======== ========
Key Financial Metrics:
Revenue growth - outsourced
portals 18% 23% 22% 17%
Same state revenue growth -
outsourced portals 8% 20% 8% 18%
Gross profit percentage -
outsourced portals 45% 48% 49% 50%
Selling & administrative costs as
a percentage of portal revenue 23% 20% 21% 22%
Recurring portal revenue
percentage 95% 97% 96% 97%
Portal Revenue Analysis
(thousands):
DMV $9,844 $9,109 $31,858 $26,408
Non-DMV 7,370 5,528 20,139 16,276
--------- -------- -------- --------
Total $17,214 $14,637 $51,997 $42,684
========= ======== ======== ========
NIC Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except for share amounts
September 30, December 31,
2006 2005
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $32,661 $36,902
Marketable securities 42,000 20,500
Trade accounts receivable 28,213 22,269
Unbilled revenues 406 2,198
Deferred income taxes 755 421
Prepaid expenses & other current assets 1,331 1,632
------------- ------------
Total current assets 105,366 83,922
Property and equipment, net 3,666 3,327
Unbilled revenues - 1,395
Deferred income taxes 22,979 28,916
Other assets 345 285
------------- ------------
Total assets $132,356 $117,845
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $30,011 $24,458
Accrued expenses 5,372 6,642
Application development contracts 557 1,261
Other current liabilities 350 317
------------- ------------
Total current liabilities 36,290 32,678
------------- ------------
Commitments and contingencies - -
Shareholders' equity:
Common stock, no par, 200,000,000 shares
authorized 61,750,900 and 61,073,505
shares issued and outstanding - -
Additional paid-in capital 209,699 207,444
Accumulated deficit (113,465) (122,093)
------------- ------------
96,234 85,351
Less treasury stock (168) (184)
------------- ------------
Total shareholders' equity 96,066 85,167
------------- ------------
Total liabilities and shareholders'
equity $132,356 $117,845
============= ============
NIC Inc.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
--------- -------- -------- --------
Cash flows from operating
activities:
Net income $2,465 $2,387 $8,628 $3,960
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation & amortization 501 422 1,531 1,141
Stock-based compensation
expense 477 - 829 -
Application development
contracts (49) (120) (704) 1,338
Deferred income taxes 1,533 1,473 5,603 2,510
Equity in net loss of
affiliates - - 97 -
Loss on disposal of property
& equipment 49 - 49 -
Changes in operating assets and
liabilities
(Increase) decrease in trade
accounts receivable (1,481) 5 (5,944) (4,708)
(Increase) decrease in
unbilled revenues 88 (700) 3,187 2,992
(Increase) decrease prepaid
expenses & other current
assets 109 (386) 286 (92)
(Increase) decrease in other
assets (66) 14 (140) 76
Increase in accounts payable 2,475 1,527 5,553 6,505
Increase (decrease) in
accrued expenses 561 764 (1,270) (302)
Increase (decrease) in other
current liabilities 96 (4) 33 (35)
--------- -------- -------- --------
Net cash provided by operating
activities 6,758 5,382 17,738 13,385
--------- -------- -------- --------
Cash flows from investing
activities:
Purchases of property and
equipment (643) (826) (1,919) (1,304)
Purchases of marketable
securities (8,500) (7,900) (21,500) (30,900)
Maturities of marketable
securities - - - 15,000
Cash and cash equivalents -
restricted - - - 3,000
--------- -------- -------- --------
Net cash used in investing
activities (9,143) (8,726) (23,419) (14,204)
--------- -------- -------- --------
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 220 745 1,218 2,227
--------- -------- -------- --------
Net cash provided by financing
activities 220 745 1,440 2,349
--------- -------- -------- --------
Net increase (decrease) in cash
and cash equivalents (2,165) (2,599) (4,241) 1,530
Cash and cash equivalents,
beginning of period 34,826 34,898 36,902 30,769
--------- -------- -------- --------
Cash and cash equivalents, end of
period $32,661 $32,299 $32,661 $32,299
========= ======== ======== ========
CONTACT: NIC Inc.
Chris Neff, 435-645-8898
cneff@nicusa.com