EGOV - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the NIC 2018 Fourth Quarter Earnings Announcement. Today's call is being recorded. At this time, I'd like to turn the conference over to Angela Davied. Please go ahead, ma'am.

Angela Davied

Thank you, Operator. welcome fourth and earnings everyone, afternoon, to quarter NIC's call. Good quarter release announcement for press XXXX NIC's ago. The minutes fourth earnings XX was issued

at is our release available egov.com/investor-relations. website earnings Our also corporate on

to at You also we the call headquarters you. may XXX-XXX-XXXX our will and e-mail information

Joining are CEO, and call Harry Officer. today Chief Kovzan, NIC's Financial the us Herington; on NIC's Steve

Company's this Then, statements. the performance year results, renewals, estimates, effective expected share call fiscal objectives length including facts statements CFO will and expected the of assumptions reading other our possible information, business Company's CEO upon Any relate not to relating based. contract of the Following do include plans, acquisitions potential XXXX to constitute projections, possible statements questions. prepared and that our future contracts dividends regarding we'll or remarks. to forward-looking to future made those current financial for terms, cautionary operating are potential statements Company's new statements the relating the rate, statements during These which expected the statement and regarding the or statements and tax statements potential open and relating deliver to repurchases events, for historical statements forward-looking relating

as political, forward-looking or candidates on the successfully statements to and and data its competitive, statements. ability contracts security which to agencies, social in the acquire and the risks These identify well Company to Company's the possible may termination Company incidents. assumptions and businesses, include integrate Forward-looking and economic, based rights current with partners, suitable from local existing sign including states that renew in various of risks acquisition are as and acquired to the whole uncertainties, differ government contracts any and ability new and to to federal, part, cause and expectations are business, national materially of subject market actual conditions, regional results

cause as statement the differ about from forward-looking the as recent Risk XX-K on no detailed statements Factors a events applicable to titled undertake Statements at You Caution SEC's by Forward-Looking risks result future. and of future filings call, any A update These with of as SEC. should Company's a results of in forward-looking discussion speak we the such otherwise. is call the could publicly most at guarantee the be to prediction not of Forms may are only except About of website whether date included Any Sections or rely actual obligation that and or XX-Q during statements uncertainties filed any available forward-looking or and materially statements the sec.gov. this new made information, forward-looking as this required law, revise events and

and Executive Harry my Now, Officer it introduce Chief NIC's pleasure is of Herington, the Board. to Chairman

Harry Herington

Angela. you, Thank

call begin news Knapp me Robert last Robert the asset with in promoted resigned to was our as a the Officer. Operating XX Earlier was Let XXXX. change for Officer the Chief Chief NIC valuable week, concerning in this today executive years Operating to NIC's and team.

this not we strategy. NIC, vertical all lasting to on initiatives His elected significant many recently, company will wish leave The his impact federal including operate he contributions our transaction-based Screening led has this he time. structuring during Pre-Employment product best. first fill business, more our core to And at our managing shaped the a to program. and tenure addition In the at help NIC, him contract position

attention focusing providing an oversee partners. our on and the business government management growing consisting a relationships to expect my government to have outstanding full on services our excellent continue managers they will our deliver. vice digital and place, partner regional who strong and we general of We I I the team do in future. job presidents service know

week that State first through the this earlier contract Maryland RXGov contract of subscription to the XXXX. five-year monitoring and fact, we announced the collect platform serve is RXGov platform. will with controlled In deliver and us. of secured information Chesapeake the The technology a this new to health extends substances drug in our we region. as I the CRISP, thank exchange the want for and and to Mid-Atlantic confidence Patients, their state Maryland prescribed for System information known surrounding dispensed state Information Regional regional the about in as our

Boat of contract deliver a XX-year signed with a The Commission outward and great Commonwealth permitting Pennsylvania the comprehensive from & system. and the new agreement Pennsylvania. us comes Game Commission to Another Fish have licensing

solutions the developed functionality platform over Go This hunt as services, million will the $XX When in fishing outdoor solutions in more to permits, fish more. technology which the years, totaling the and fish XX country. much states, will Commonwealth's NIC youth and recreation in range modern shooting boat our NIC solution best than deliver renewals, unique including launch licensing provider of Wild This Wisconsin. recreation-related and transactions outdoor such means permits will bring all we will become the services our system, and licenses, offer hunt licensing and fishing the largest this licensing hunting features hunt Pennsylvania, have fish We annually. of we premier product

you hunting Commission moment. Thank Both we strategy Steve in permits & for in and Commission will Specifically, sold enhanced licenses, are of the ranks will a value and states of new on second the the US. XXXX. believe touch for across contracts vertical Boat two innovation the aspects your Game the your with citizens. Pennsylvania contracts trust product our a just to and financial deliver these in tags, your nation to Pennsylvania commitment Fish driving million for the X.X stamps beginning

solution, includes Illinois, a PDMP I current and well the the X, outdoor permitting platforms we're mentioned, reminder, and licensing our processing. which RXGov, deploying suite as payment just vertical our As in of plus products our enterprise recreational as

in Financial paying growth historical our quarter total same-state rates results Our up growth. Same-state was is the vertical up is XX%. revenue were line for X% is and the same-state enhancing with as for long-term with off quarter and product strategy strong. IGS business and it revenues diversifying growth revenue revenues core driving

our again once the high and exceeded we guidance. year, per the share annual earnings end of For revenue

XXXX, services Our team that new secured simpler, and contract interactions easier renewals in make government are and we secure. constantly XX more deploying

XXXX? that in what vision, include continue store our So, three Strategies for which is core elements.

a Nebraska we partners five-year partners. of contract into remain government delivering to two new continue enterprise-wide Colorado. First, contracts Nebraska the government government and providing focused already contract with signed New services digital partners innovative a retention, enterprise-wide a three-year Colorado, securing the forward our secured in State us contract opportunities to on In your years, runs innovative the includes appreciate long-standing continue signed Nebraska renewal, delivering Colorado. We into Special solutions services with to which future. Year, the government look The and five new and in to state of XXXX. We've term digital two-year thanks base partnership plus over and our in providing renewal. to more we solutions. contract a XXXX, years,

business. ever. the executive enhance on year. our offer form focus leverage core NIC sheet, that the while strategy. element future industry-leading to in a all to in employees financially by the with And investments growth expanding making maintain we to actively we in XXXX that acquisition NIC's XXXX vertical continue are That finally, with second turn focused in strategically, and what's our which to products And of our our call just enhancing my attractive best includes complement strive cash it's number critical long-term government diversify pristine to our pleasure team, includes one strategy business continuing Officer, a to drive this Myself, the our return to Steve? Kovzan. our ability balance to The will which sample identifying of about our on of that, of the and continue fit the am to years deliver excited Also, to and of NIC's commitment Chief culturally to vertical to and utilize acquisition growing maintaining us strength, quarterly over XXXX I of NIC opportunities digital capital products. Financial for a that and solutions. we make financial Steve dedicated opportunities has business the we allowed the ahead dividends. us portfolio is more stockholders with This

Steve Kovzan

legacy contract Thank $X.X XXXX, compared prior contract million revenues $X.XX Harry. processing payment compared Portal the of for earned Total quarter. the to X% quarter Texas year commenced revenues prior year $XX.X quarter current per the prior new In the driven legacy from Texas for the million also by in comparison from X, the payment the to lower revenues we XXXX largely fourth revenues with contract, decreased quarter of revenues from the the X% $X.XX to new contract, September portal in on purposes. share included you, year quarter, from quarter. million, processing in which compared the to $XX.X down

up In healthy increased for or state higher current Interactive or license including year across volumes revenues revenue quarter, inspections same motor state multiple revenue increased addition, of revenues revenues portal delivered enterprise DHR some driver's materials X% states. primarily components the Government XX% licensing state growth. the the $X.X Illinois, the previously quarter year quarter various And same when state state revenues in Services the year Same by in X% vehicle included Record first XX% nationwide driven were time key permitting $XXX,XXX by portal well prior renewals. products revenues prior and quarter, as the increased services of quarter. one down our Total major the disclosed IGS driven and History of down quarter a for a state the breaking the Same increase from from to vehicle phase prior in Due same lastly, as million from several price we across Driver registrations, over states. platform. and of

in part quarter XX% This prior generated $X.X the on payment quarter. revenue and growth of over an and revenues quarter lower launched administrative related and X, $XXX,XXX Texas expenses, costs revenues totaled from selling significantly mainly from revenues and driven operations in the to expense operating seasonally increase prior processing expect Screening rebranded the for income an capitalized related in prescription federal as from Program software XX% acquisition was reflect services lower profits legacy million October $XXX,XXX approximately drug weakest driven to the the other expense, in processing service, lesser and costs which Illinois. increase also resulting payment development to the margin fourth from technology revenues and Software of profits business Pre-employment quarter. we've of to XXXX year what This related by increase to by quarter, driven the extent by compensation each which results amortization and in information company-wide an year and year ongoing the in in services in development XX% decreased Recreation.gov software and amortization down we from Current higher resulted to an service. previously quarter and intangible RxGov announced federal contract up asset in monitoring from platform new the and a enterprise solutions. income from in new primarily investments by approximately contract XX%, the compared and the to assets for the amortization for Operating be XXXX,

XXXX XXXX state a totaled $X.X revenues same million based Also up with legacy increased the and $XX.X XXXX. transaction X% year to from portal the total in DHR X% to processing state revenues state the up contract, fiscal revenues million revenues revenues from portal development were revenues included revenues state $X.X In the for from increased X% revenues the contract. million XX% an included revenue XXXX, exceeding Same compared in full materials payment strong $XXX.X X%. year IGS Total XXXX Full guidance recap the briefly our year. I'll Texas XXXX, year revenues time same portal up results. and new software XXXX. Texas relating for $XX in to legacy contract from Same portal million Illinois XX% year. finished of million Portal million. the to $X.X high-end million $XXX.X up Now,

one-time for that Software park Park service, the Service. XXXX. the $X.X XX% in increase XXXX. in passes in XX% months XXXX. of rate services leading increased the in tax up decreased decreased the at Operating to from price slightly managed the legislative on for end $XX.X income National results a Lifetime the spike year down X% effective YourPassNow NIC's and became year, operating behalf $XX.X Recall to from in XX% Passes X% margins million effective was with the in through that digital down August XXXX. revenues to for significantly revenues XX%, Demand of prior we reflect a pass to million Senior million year

As favorable lower of XXXX, the we've to of with out to Act. closed share $X.XX our shared year. related the year, Cuts XXXX in per attributable over guidance benefits for the and the was rate past earnings We $X.XX, from exceeding Jobs primarily Tax the high-end up earnings

Our Directors first Board declare $X.XX generation quarter to dividends consistently XXXX. share regular cash March per our and of of strong in cash flow in share totaling Board XXXX payable Directors regular quarterly a of dividend the for our declared per cash recently of allowed XXXX quarterly $X.XX

payment earnings to range $XXX financial $XX.X $XXX.X revenues million. sorts and total a from with range Currently created to NIC Now future fiscal portal let's a and reset will for Currently of and from share be for for reflects contract. legacy compared $X.XX the slight range but a card million operating trough XXXX will profitability year from per $XXX.X million million XXXX revenues margins of nature revenues average profit credit range at a contract to from Clearly move to in a from XXXX. headwind by year the on of Texas for the the guidance year anticipate benchmark to $X.XX. and with to million a to contract performance. expect our lower new payment decline software most million baseline guidance from to year at to due standpoint, revenues services with our to to $XX.X from processing processing $XXX $XX offset margins revenues payment profit Texas materially lower new revenue the in corresponding approximate earn fees. the significant contract be company-wide we services million and X% revenues our of the portal to whereby significantly year, revenue margins High-end interchange the

to Our the first where second we portal licensing Illinois, by currently reflects deliver guidance revenue phase revenue core enterprise from of of the expect $X.X also system permitting end million of and the quarter. the

for licensing printing Illinois guidance Our includes revenue new permitting from and no services.

to currently and working active Although, with are agencies we services the discussions state. in in expand are hard

in this expect same revenues and software state in both same state range a states million in in Allen XXXX. to produce to housekeeping launch a rate our XXXX, organic XXXX. of expected in XXXX system which a our five range years. Illinois be the auto XX% million of excluded under portal from Texas new by expected IGS Jersey in higher year are will we New mid-year transaction revenue Furthermore, As by statewide year full X% and to $XX.X of High-end be of category past based to $X as a We Wisconsin, well as from the note, strong and strongest revenue we several XXXX across post to from XX% currently are revenues services we state which will from in Recreation.gov, for the businesses same the registration in generate driven growth Booz $X.X from titling annual strong driven reflects estimate our $XX.X run revenues. core results subcontractor will payment business, processing expect revenues the to to million including with dozens deployment ranging Hamilton. million services growth growth and of

million new prescription platform. contract deliver voice from new guidance customer in Our reflects And of believe, Total Maryland of we revenue over contract the new our upside to in us our opportunities and contributions deliver to federal also contract have revenues. we paid additional the drug from fees to secure SaaS-base contract. for the solution of monitoring a in value five-year a minimum will our RxGov $X.X life USDA with be Maryland calls to

revenues and outdoor cost the in recreation implementation meet the our in life million of the launch comprehensive XX-year Next, $X I'll Commonwealth provide our over XXXX, $X.X to million licensing in in solution permitting except and guidance, Pennsylvania. which side some development to excess reflects generate on of currently contract. specific costs. OpEx configure the early approximately system We color needs To of incremental annually transaction-based the for and of to of

also approximately operating last made excludes intangible year, This asset amount $X moment. reflects we PDMP our acquisition on with in associated losses platform. new million Our from technology guidance the touch RXGov which I'll amortization, a in PDMP

million due of of that first platform platform approximately approximately with potential deferred to approximate and our XXXX, the amortization platform is to processing $X development are RXGov currently $X and enhancements will consideration $X solutions currently because software Finally, development expense expect RXGov payment expected and pay if and with tools. to enterprise RXGov any in costs end acquired mainly to conditions of in guidance investments development evaluated. as $X proprietary amortization of to deferred million Recall met. Capital assets being range still the from software excludes while and from such solutions related to million, $X.X XXXX associated million we million, amortization reflecting costs costs internal million technology RXGov range solutions. resignation capitalized additional expenditures Robert in $X Knapp's in to in internal million, to $X.X by $X.X XXXX. the Amortization investments asset by enterprise to $X.X for to intangible increase for they're capitalized consideration to expected application are associated industry-leading million certain XXXX million GovXGo our ongoing expense use expect quarter the of We the

Moving on, investable interest balance on cash generate expect higher our income to XXXX. we in

on was year-end our cash the balance half XXXX than $XXX interest. more in earning sheet million As of at

income. rate expect One always, XXXX. effective from before our the back standpoint, reminder XX% or income to items guidance, reflects guidance Our revenues interest approximate we tax any call not our for over From from final our that, tax an with discrete approximately will XXXX I on EPS $X.XX any projections unannounced currently do as turn costs And contracts. Harry. include to in

Harry Herington

in Steve. a Thank forward year NIC I XXXX. to look for you, strong

already to recent strategy allocation leverage two retain strength contracts, active contracts We're to new by seeing prong with three upon strategy through diversify momentum off. Our and the organic the expanding our of core is ahead of for financial capital more to With signing are vertical verticals, encouraging in our growth key in and strongest Operator, seen believe five government we'll expect the us. best generate that firmly years. up call business days NIC's now we've our we to that, the I open questions. past paying

Operator

[Operator Instructions] from And question sir. Davidson. we'll take from Please Heckmann ahead, our first Peter go

Peter Heckmann

would've if material, we renewals but Nebraska - them you Colorado. conditions were that sure be should changes I'm called in of they on there out thinking and notable, Any the congrats are about? or in terms

Harry Herington

them with No. There a tremendous great relationship. and I'm a are the same. partnership years excited. for potentially We've It's

Peter Heckmann

And to then the been extended February have pre-employment FMCSA XX. screening application

likely the do will be think Given shutdown, that extension? still what government you and we'll there? is you rebid, contract another short-term Do see outcome you think most think

Harry Herington

I'm on DC, that's now even going dance going the in not right With that. in to on weigh

think into about as what transparency the we it you that. do is unfortunately, I have and before, said we same

Steve Kovzan

the shutdown affected of business that, thing at one behalf I government that will all. that the has No, the trucking the operating say I But FMCSA think with companies. we're is affected - don't on

Peter Heckmann

in the I but know but I on was XXXX, guidance to have included they ask mainly work like any placed, buyback on any then know in And a XXXX? as and a I shut that that's the looked and you there acted for doing to it well. meant is it then rebid, annual to lastly, authorization good down, buyback you that. referring Yes, were

Steve Kovzan

But to do to we find Pete. it Not makes chances that, and, to not do sense it if for absolutely will do we opportunistic again, us specifically, hesitate that.

Operator

And our Loop next from Instructions] question Capital. is Vafi [Operator Joseph from

Joseph Vafi

worried development the new an on out follow Harry up. the on results be have Nice update or else I about? on Any new a front on we organic business earnings there, basis, RFPs should And anything line.

Harry Herington

from of nothing looking - at I got Yes, where competitive I feed going out heading. any we're is of to I - I'm there. traditional that and of standpoint, speak we're nature we what tell a you, there's our not enterprise we lot highly I we enterprise-wide traction. growth tell you because type of would When the no, there's just when an opportunities. the like have, seeing, what those. would like But to I'm vertical and

Joseph Vafi

growth, get states? it then if expand know into driven hard to of or how offerings some versus to - out much would it's I economically to maybe we same-state And be interesting feel continuing drill down kind the for of a helpful mean your service in the

Steve Kovzan

Joe, is Yes, this Steve.

new was the next for of and And signed mainly we contract growth. and the related we'll one the - expect year. for we expect, about other over of titling currently have certainly, talked during couple, about reflected our Jersey, growth, system in registration the with a XXXX past that existing and State that for also quarter we new talked services to the addition terms that saw be auto our in the launching, our year, to payment where the one That's that's statewide New kind midyear and see the the we of In We of processing. states. a of is of XXXX we most out one them in guidance called

the seeing is really most growth that's from new services. of we're So

Joseph Vafi

Thanks. the And Are do this more with is vehicles? you of verticalization, on - and your then - contracts of Or slightly this you existing it's when states? business to that's way away these on contracts a of doing focus new on tracking work different from this slightly maybe kind perhaps how business? are this new you kind existing

Harry Herington

stand-alone. we're our these We won of with and strive these have, those these had case, course, demonstrating We we that. in little can verticals, we when to and contracts building the and existing that both. you present use we we're That speak cases, opportunities is, opportunities. how go and products I'll to leverage tell we're agencies relationships for. going a in. these of our do what these bit to In It's going

we as So do where not it somewhat, non-NIC they do we a when give business have embrace are does we a diversifying looking stand-alone whether NIC opportunities there into The about it's contracts, nice which states. and unique the right start unit have products states that us well, contracts, we will at now. state thing in and portal

Joseph Vafi

And front. then we on I more here, some this on Or mean, the if thoughts could large one small M&A a just couple small? possible sneak different playbook software larger the we that Any is in here? had acquisition versus Is could - Harry, is the it I of see quarters ago. deals? that

Harry Herington

out. we we phenomenal. chase year. the is larger us deal, you, question. opportunity. No although, thank technology - like it deals chased we beat It a great gives great looks - last And a have a did that's We And small

that these and a Here's business looking is stockholders. What make not to there of grow for the And do? either that solution. appropriate and the level? it my solution at of does sure And going verticals. next go size the looking for then that and get to return able be the deal, some it's at How isn't team what's or we're get out it the the to core deciding the us the that's does help right us look we a factor, solutions size, to is

small of ever things. our don't whether whole worry just - looking about So bunch for a we're

right looking just the for are things. We

Steve Kovzan

take typically - states the into relationships to kind and most of we technology of market really one in that technology And agencies where of I see or number the Harry our fragmented. services we And government the acquisitions these Joe, regardless strategic is states, into government have is highly state. would The as across size. Well, that thing sell potentially come unique we where Yes. the in add, non-NIC auction position them can state of that we're market. broad that complementary and opportunities said,

continue proactively in from we So aggressively. we're and kind drive to look and to be to acquired position of there able businesses, unique a value

Operator

take we'll next from Herb And from Stifel. question our Buchbinder

Herb Buchbinder

make. bit right something give year, question of last say of idea maybe of That what like a you value the in high last did can I more wanted, about to kind to covered little go get found terms if but you you'd kind how ideal might you like if detail an thing. acquisition just the I'd you the of And

money cash, right do to You've a it to do? thing the if deal got plenty was borrow you of but would

Harry Herington

Absolutely, you're get we willing the did have it and Herbert. back. to brings because would company on It one. We we are And the to How big leverage have year go? were right yes, after right. that to company opportunity value us that required depends last went the a them they the

for And - returns. ability free. debt mean, freedom, of That of we're debt a stuff. us I so I'm lot right not lot But to on not the do gives a actually we are nervous taking about

expand look business us with again, looking core at that we're these verticals. business, for the will, or our So things help

with opportunity for up that everything market. and be auction. get NIC right companies to we're gives the what us? very because, we of to that we're a it That As now again, going these Steve relationships to Steve auction, to mean part Plus, is right a for it's I lot it to said, family. it's decide, don't the building going want after today space, would limit There's fragmented what if said, it show opportunities. us in aren't going of see the them is also

at just it. aggressive for we're right look we ones and are going So the know, to

that'll company. for We grow ones this right are the looking

Herb Buchbinder

continue loss do obviously want in I Texas we're offset to to you of know can the you revenue some do. to and hoping that's what

work. good the up keep So

Harry Herington

Have that. Herb, us. faith in I appreciate

Herb Buchbinder

do. We

Operator

ahead. Davidson. And go from Peter next we'll take Please our question Heckman from

Peter Heckman

a recreational have just I follow-up. the licensing in on Congrats winning Pennsylvania.

the actually awarded had notes this time another Commonwealth that last Our to company that year. indicated

provide curious now background? can wound that it's just with that you so how And NIC, any transpired if up

Harry Herington

highest not I'm will from my all because integrity. will going I time. is tell mean you I to the we here be I do challenge speak that'd for do, the I the it people Whatever state. be very careful you with inappropriate there. What

was, initially wanted this. we gave some We them deliver decided at to be we going I'm did to showed what us and the go it. them they there, point, product different that And showed us, deliver. it out can ours Going to about then with. great to actually how a gave they choose a excited They our came presentation. we opportunity go and and this vendor, one was they they gave

You good come to you. good back things, do things

Operator

to It time. the questions further over turn at this we remarks. to like appears Harry back no conference have Herington I'd additional any for

Harry Herington

everyone by look you have X. thank you there you in encourage on us with forward Olathe, very XXXX I Stockholder sharing our Annual to And X, first Thank afternoon. this May much. May to you to joined be quarter Meeting results who Kansas. on followed Allie. you, Thank financial I

Operator

This concludes your Thank participation. you call. for today's

disconnect. may You now

Nic (EGOV) 30 Jan 192018 Q4 Earnings call transcript