NIC Inc. (NASDAQ: EGOV), the dominant provider of official
eGovernment services, today announced net income of $8.9 million
and earnings per share of 14 cents on total revenues of $70.4
million for the three months ended March 31, 2015. In the first
quarter of 2014, the Company reported net income of $9.4 million
and earnings per share of 14 cents on total revenues of $65.4
million.
Quarterly portal revenues were $65.9 million, a 7 percent
increase over the first quarter of 2014. On a same-state basis,
portal revenues were $64.8 million in the current quarter, a 7
percent increase over the first quarter of 2014. Same-state,
transaction-based revenues from Interactive Government Services
(IGS) rose 12 percent over the first quarter of 2014, with
same-state, transaction-based revenues from Driver History Records
(DHR) up 5 percent due mainly to price increases in three states.
Total same-state, transaction-based revenues (IGS and DHR) rose 9
percent in the current quarter. Same-state portal software
development revenues decreased 23 percent as the Company cycled
against a stronger quarter of project-based, time & materials
revenues in the prior year quarter.
Current quarter revenues from the Connecticut portal, which
launched in the second quarter of 2014, totaled $1.1 million.
Revenues from the legacy Arizona state portal contract, which
expired on March 26, 2014, were $0.8 million in the prior year
quarter. Start-up costs from the pilot program with the Louisiana
Department of Public Safety totaled $0.3 million during the current
quarter.
NIC’s portal gross profit percentage was 37 percent in the
current quarter, down from 39 percent in the first quarter of 2014,
in part reflecting start-up costs from the Louisiana pilot and a
temporary decline in gross profits of $1.4 million attributable to
the Texas portal due to a change in legislation effective March 1,
2015 that affected the process for vehicle inspections in the state
and the timing of revenues associated with this service. The change
in legislation resulted in a temporary decline in IGS
transaction-based revenues from the vehicle inspection service
totaling approximately $0.7 million coupled with approximately $0.7
million in non-recurring costs to transition the service to the new
vehicle inspection process.
Software & services revenues were $4.4 million in the
current quarter, up 14 percent from the first quarter of 2014,
driven by an increase in transactional revenues from the federal
Pre-employment Screening Program and other payment processing
services.
“Once again, I am pleased to see our business producing
consistent results,” said Harry Herington, NIC Chief Executive
Officer and Chairman of the Board. “We are committed to developing
efficient and secure online services that make government more
accessible to businesses and citizens.”
Operational Highlights
Recently, two NIC subsidiaries signed new contracts to provide
state eGovernment services. NIC’s Oklahoma subsidiary, Oklahoma
Interactive, LLC signed a new contract to manage the state’s
official government portal and provide self-funded eGovernment
services. The contract includes renewal options which the state can
exercise to extend the contract through April 2020. New Jersey NIC
subsidiary, New Jersey Interactive, LLC, signed a new contract with
the state to provide self-funded eGovernment services. The contract
includes a five-year base contract with renewal options which the
state can exercise taking the contract through May 2022.
During the quarter, two NIC subsidiaries received contract
extensions. The Tennessee Division of NICUSA received a one-year
contract extension from the State of Tennessee, and Alabama
Interactive, LLC received a one-year extension from the State of
Alabama.
First Quarter Earnings Call and Webcast Details
On the call, the Company will discuss its 2015 first quarter,
and answer questions from the investment community. The call may
also include discussion of Company developments, and
forward-looking and other material information about business and
financial matters.
Dial-In Information
Monday, May 4, 2015 4:30 p.m. (EDT) Call bridge:
888-401-4668 (U.S. callers) or 719-457-2083 (international callers)
Conference ID: 3687918 Call leaders: Harry Herington, Chief
Executive Officer and Chairman of the Board Steve Kovzan, Chief
Financial Officer Robert Knapp, Chief Operating Officer
Webcast Information
To sign in and listen: The Webcast system is available at
https://www.egov.com/investor-relations.
A replay of the Webcast will be available by visiting
https://www.egov.com/investor-relations.
About NIC
Founded in 1992, NIC (NASDAQ: EGOV) is the nation's leading
provider of official government websites, online services, and
secure payment processing solutions. The Company's innovative
eGovernment services help make government more accessible to
everyone through technology. The family of NIC companies provides
eGovernment solutions for more than 3,500 federal, state, and local
agencies in the United States. Forbes has named NIC as one of the
“100 Best Small Companies in America” six times, most recently
ranked at No. 36 (2014), and the Company has been included four
times on the Barron’s 400 Index. Additional information is
available at https://www.egov.com.
Cautionary Statement Regarding Forward-Looking
Information
Any statements contained in this release that do not relate to
historical or current facts constitute forward-looking statements.
These statements include statements regarding the Company’s
potential financial performance for the current fiscal year,
statements regarding the planned implementation of new portal
contracts and projects under existing portal contracts, and
statements regarding continued implementation of NIC’s business
model and its development of new products and services.
Forward-looking statements are subject to inherent risks and
uncertainties and there can be no assurance that such statements
will prove to be correct. 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, NIC’s ability to successfully integrate into
its operations recently awarded eGovernment contracts; NIC's
ability to implement its new portal contracts and new projects in a
timely and cost-effective manner; NIC’s ability to successfully
increase the adoption and use of eGovernment services; the
possibility of reductions in fees or revenues as a result of budget
deficits, government shutdowns or changes in government policy; the
success of the Company in renewing existing contracts and in
signing contracts with new states and federal government agencies;
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; the possibility of security breaches or
disruptions through cyber attacks or other events and any resulting
liability; and general economic conditions and the other important
cautionary statements and risk factors described in NIC's 2014
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on February 24, 2015. Any forward-looking statements
made in this release speak only as of the date of this release. NIC
does not intend to update these forward-looking statements and
undertakes no duty to any person to provide any such update under
any circumstances.
NIC INC. FINANCIAL SUMMARY (UNAUDITED)
Thousands except per share amounts and percentages
Three months ended March 31,
2015 2014 Revenues: Portal revenues $ 65,914 $ 61,482
Software & services revenues 4,445 3,915
Total revenues 70,359 65,397
Operating expenses: Cost of portal revenues, exclusive of
depreciation & amortization (1) 41,494 37,560 Cost of software
& services revenues, exclusive of depreciation &
amortization 1,290 993 Selling & administrative (1) 10,538
9,208 Depreciation & amortization 2,292
2,250 Total operating expenses 55,614
50,011 Operating income before income taxes 14,745 15,386
Income tax provision 5,804 6,010 Net
income $ 8,941 $ 9,376 Basic net income per
share $ 0.14 $ 0.14 Diluted net income per share $
0.14 $ 0.14 Weighted average shares
outstanding: Basic 65,387 65,057
Diluted 65,387 65,057 Key
Financial Metrics: Revenue growth - outsourced portals 7 % 6 % Same
state revenue growth - outsourced portals 7 % 7 % Recurring portal
revenue as a % of total portal revenues 97 % 95 % Gross profit % -
outsourced portals (1) 37 % 39 % Revenue growth - software &
services 14 % 23 % Gross profit % - software & services 71 % 75
% Selling & administrative expenses as a % of total revenues
(1) 15 % 14 % Operating income as a % of total revenue 21 % 24 %
Portal Revenue Analysis: IGS transaction-based $ 36,147 $
32,369 DHR transaction-based 25,652 23,476 Portal software
development 2,295 3,027 Portal management 1,820
2,610 Total portal revenues $ 65,914 $ 61,482
(1) The Company reclassified certain income statement
employee benefit related expenses for the three- month period ended
March 31, 2014 to conform to the 2015 presentation. The
reclassification resulted in a reduction of selling &
administrative expenses of $1.1 million for the three-month period
ended March 31, 2014 and a corresponding increase in cost of portal
revenues. In addition, the reclassification resulted in a reduction
of selling & administrative expenses as a percentage of total
consolidated revenues of 2% for the three-month period ended March
31, 2014 and a corresponding decrease in portal gross profit
percentage. The reclassification had no effect on total operating
expenses, operating income, net income, earnings per share or cash
flows.
NIC INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED) Thousands
except par value amount March 31,
2015 December 31, 2014 ASSETS Current assets:
Cash $ 92,104 $ 87,983 Trade accounts receivable, net 67,822 57,468
Deferred income taxes, net 1,079 1,039 Prepaid expenses & other
current assets 12,525 11,502 Total current assets
173,530 157,992 Property and equipment, net 11,018 12,247
Intangible assets, net 2,395 2,394 Other assets 444
446 Total assets $ 187,387 $ 173,079
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
48,318 $ 41,402 Accrued expenses 16,498 19,751 Other current
liabilities 2,458 2,902 Total current liabilities
67,274 64,055 Deferred income taxes, net 1,558 1,536 Other
long-term liabilities 3,563 3,350 Total liabilities
72,395 68,941 Commitments and contingencies -
- Stockholders' equity: Common stock, $0.0001 par, 200,000
shares authorized, 65,543 and 65,303 shares issued and outstanding
7 7 Additional paid-in capital 96,546 94,690 Retained earnings
18,439 9,441 Total stockholders' equity
114,992 104,138 Total liabilities and stockholders' equity $
187,387 $ 173,079
NIC INC. CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
Thousands Additional Common
Stock Paid-in Shares Amount Capital
Retained Earnings Total Balance, January 1,
2015 65,303 $ 7 $ 94,690 $ 9,441 $ 104,138 Net income - - -
8,941 8,941 Restricted stock vestings 258 - 74 - 74 Dividend
equivalents cancelled upon forfeiture of performance-based
restricted stock awards - - 18 57 75 Shares surrendered and
cancelled upon vesting of restricted stock to satisfy tax
withholdings (93 ) - (1,581 ) - (1,581 ) Stock-based compensation -
- 2,159 - 2,159 Tax deductions relating to stock-based compensation
- - 204 - 204 Shares issuable in lieu of dividend payments on
unvested performance-based restricted stock awards - - (149 ) -
(149 ) Issuance of common stock under employee stock purchase plan
75 - 1,131 - 1,131
Balance, March 31, 2015 65,543 $ 7 $ 96,546 $
18,439 $ 114,992
NIC
INC. CASH FLOW SUMMARY (UNAUDITED)
Thousands Three months ended March 31,
2015 2014 Cash flows from operating
activities: Net income $ 8,941 $ 9,376 Adjustments to reconcile net
income to net cash provided by operating activities: Depreciation
& amortization 2,292 2,250 Stock-based compensation expense
2,159 1,000 Deferred income taxes (1,436 ) (676 ) Loss on disposal
of property and equipment 27 104 Changes in operating assets and
liabilities: (Increase) in trade accounts receivable, net (10,354 )
(8,797 ) Decrease in prepaid expenses & other current assets
395 2,241 (Increase) decrease in other assets 2 (34 ) Increase in
accounts payable 6,916 7,987 (Decrease) in accrued expenses (4,960
) (7,227 ) Increase (decrease) in other current liabilities (444 )
415 Increase in other long-term liabilities 213
161 Net cash provided by operating activities
3,751 6,800 Cash flows from investing
activities: Purchases of property and equipment (677 ) (919 )
Capitalized internal use software development costs (288 )
(325 ) Net cash used in investing activities (965 )
(1,244 ) Cash flows from financing activities: Proceeds from
employee common stock purchases 1,131 1,107 Tax deductions related
to stock-based compensation 204 690 Net
cash provided by financing activities 1,335
1,797 Net increase in cash 4,121 7,353 Cash, beginning of
period 87,983 74,245 Cash, end of
period $ 92,104 $ 81,598 Other cash flow information:
Non-cash investing activities: Capital expenditures accrued but not
yet paid $ 126 $ 189 Cash payments: Income taxes paid $ 6,414 $
6,532 Cash dividends on common stock previously restricted for
payment of dividend $ - $ 22,982
NIC Inc.Angela Davied, 913-754-7054adavied@egov.com
NIC (NASDAQ:EGOV)
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